April 9th, 2014 11:42 AM by Jackie A. Graves, President
Know what to expect before you apply
Your mortgage lender will want to know a lot about you
before approving your loan application, and justifiably so; they and their
underwriters want to be assured that you meet their minimum level of
creditworthiness before lending you money.
Here are the general areas of questioning you can expect from a lender:
1. Employment and income
2. Outstanding debts
3. Cash reserves and assets
4. Down payment
5. Loan purpose
6. Property use
7. Property type
Where do you work?
How much do you make?
How long have you been at your job?
How is your income derived -- steady salary or
irregular income? If it's the latter, you may need to provide more details to
obtain a favorable interest rate.
What recurring debts do you have?
How much do you pay a month for auto
Credit cards? 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?
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?
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?
Do you plan to live in the house?
Is it investment property?
The following responses
tend to work in your favor:
Steady employment (two or more years) with the
same employer or in same line of work.
Low debt: no recent major buys (such as
automobiles) and a debt-to-income ratio of 36 percent or less.
Loan is for straight home purchase (or
Property is detached single-family home to be
used as primary residence.
Down payment of at least 5 percent of sales
price with your own money.
You'll have at least two months' worth of
mortgage payments in the bank after closing.
responses tend to work against you:
Self-employed or contract worker.
High debt: credit cards maxed out, total
debt-to-income ratio more than 36 percent.
Property is a duplex or condominium, to be used
as a vacation home or rental.
No cash left after home buy and closing costs.
Down payment is 3 percent or less of buy price
and money is borrowed.