Anyone who has ever applied for a mortgage will tell you how stressful it can be; on top of being asked for proof of income, they also have all sorts of other questions prepared. Mortgage lenders need to make sure that you have the ability to pay back what you borrow, so they might tend to grill people who take out loans from them.
Make sure that you’re ready to answer these questions if you’re applying for a mortgage so that you’ll be one step closer to buying a house:
“How do you earn a living?”
Lenders are supposed to take a good look at your income statements because this will tell them if you are in fact receiving a sufficient salary to pay off a mortgage. You can prove your source of income by providing them with evidence such as recent pay stubs and check copies. Also, they will be asking you about the number of years you’ve been in your job in order to see how secure it is.
“What kind of assets do you have?”
You have to assure the lender that not all of your monetary decisions are revolving around your plan to purchase a home, and that you’re not solely counting on the appreciation of the property to help you financially in the future. To do this, you’ll need evidence that you have other sources of money for future use, like an emergency account in case of hardships, and also a retirement fund for your senior years.
“What’s your credit history like?”
If you’re wondering why experts in the real estate field are always advising people to take care of their credit history, it’s because it makes their chances of getting a loan all the better. A lender will assess your financial history to determine if you’ve experienced any difficulty in paying back loans in the past. In addition, they’ll examine your credit inquiries, and also probe as to whether you availed of another type of loan that hasn’t reflected on your history yet during the time of your mortgage application.
“What debts are you paying for?”
To a lender, the manner by which you handle the debt you already have today can be indicative of how you might get by if they add a mortgage to your list. Ideally, they would like it if you had a debt-to-income ratio of 30 or 40% (which represents how much of your income will be used to pay off the mortgage). This percentage can be larger should you have credit cards, car loans and other forms of consumer debt.
“Are you involved in any pending litigations?”
The lender asks this question because lawsuits cost a lot of money as it drags on (which can be a financial burden), and they wouldn’t want to grant your loan if you lose the case. If the lender asks if you are going through a divorce, they’re not prying, so don’t feel as if you owe them an explanation about why you and your spouse are going through it. What they are concerned about is if you can afford to pay a mortgage after you’re done paying for the divorce proceedings (and granted that you don’t end up bankrupt).
All mortgage applicants are supposed to answer inquiries that are related to their ability to purchase a house and repay their mortgage. However, you don’t have to stick around if the lender starts asking objectionable questions like if you are disabled or are about to have children; you can either call them out for it or move on to another lender.
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