Popular Questions Lenders Ask
Getting The Loan: Table Of Contents
How to get approved
Home mortgage lenders don’t mess around with their money and they will thoroughly investigate your ability to pay back a home lone.
Here is a list of common questions home mortgage lenders ask.
Employment and income
- Who do you work for?
- What is your gross annual income?
- How long have you been employed in your current position?
- Is your income steady, irregular or seasonal?
If your income is irregular or seasonal you may have to provide more details to get good rates on your home mortgage.
Current Outstanding debts
- Do you have recurring debts?
- Are you paying back an auto loan(s)?
- Do you have credit card debt?
- How much of your monthly pretax income do these debts consume?
Cash reserves and assets
- How much money do you have in the bank?
- How much will be left after you pay your down payment and closing costs?
Down payment
- How much money are you putting down?
- Is this your own money?
- If not, is it a gift from your parents?
- A nonprofit agency grant?
Loan purpose
- Is this mortgage for a home buy or refinance?
- If it’s a refinance, do you want to take cash out at closing to pay off other debts?
- If so, how much?
Property use
- Do you plan to live in the house?
- Is it investment property?
Property type
- A condominium?
- A duplex?
Home mortgage lenders with look favorably upon you if:
- You are steadily employed (two or more years) with the same employer or in same line of work.
- You have low debt: no recent major buys (such as automobiles) and a debt-to-income ratio of 36 percent or less.
- You use your home loan strictly for buying a home (or rate-and-term refinance).
- You use your home as a single-family primary residence.
- You put a down payment of at least 5 percent (of the purchase price) with your own money.
- You have at least two months’ worth of mortgage payments in the bank after closing.
Home mortgage lenders will tend to avoid you if:
- You are self-employed or doing contract work.
- You have high debt: ie. credit cards maxed out, total debt-to-income ratio more than 36 percent.
- You intend to use your home as a vacation house or rental.
- You have no cash left after home purchase and closing costs.
- You put a down payment of 3 percent or less (of the purchase price) and the money is borrowed.
When you meet with your home mortgage lender you will need to have your paperwork in order.
Continue: Home Loan Documents To Prepare