Although your mortgage lender won’t put you inside an interrogation room and have you answer all sorts of questions, applying for a mortgage might sometimes seem like a police interrogation. Know what questions to expect for you to prepare yourself before facing your lender face-to-face.
- Where’s Your Proof of Income? – You must prepare a proof of income worth approximately two years. This includes your pay stubs, invoices if you’re an independent contractor, copies of checks, as well as other documents your lender could use for verifying your employment status. You must also include income sources, such as alimony or child support.
- What Will You Use the Property For? – You have to tell your lender if you’re going to live in the property or if you’re going to rent it to potential tenants. This would make it easier for your lender to determine your eligibility for specific loans and which is the best option for you.
- Do You Have Assets? – Essentially, your lender is looking for a balanced mix of cash savings and other investments.
- Could You Tell Me About Your Credit History? – This is your current credit score, which is something that you should have known before applying for any kind of loan. Whether it’s an FHA loan, VA loan, or a HARP home loan, it’s best to check your score before applying, try to pay off some debts, and fix any error you find.
- Do You Have Outstanding Debts? – Generally speaking, having less debt would increase your chances of getting a great mortgage rate. With most home loans, the limit on debt to income or DTI ratio is around 43%. This number varies from lender to lender, however.
- How Much Down Payment Can You Afford? This would help determine your eligibility for certain mortgage offers, the amount your lender could loan you, and your mortgage rate.
- Do You Currently Have a Lawsuit Against You? A lawsuit that involves financial judgments or consequences might affect your financial circumstances. In case you’re involved in a lawsuit, you have to prove to your lender that the outcome of the lawsuit won’t affect you financially.
Although different lenders might ask other questions, you could expect the abovementioned questions. Don’t worry because this is a standard procedure and everyone looking to secure a home loan would have to go through this question and answer portion first. This is why you should answer truthfully, provide the necessary paperwork, and hope for the best.