Questions to expect from a Mortgage Lender

When you go to a mortgage lender expect these questions to be fired at you and be prepared to answer them confidently. Questions like the purpose of the mortgage, employment history, credit check etc. will come up and you should be ready to tackle them.

What is the purpose of loan? This would be the first question you may expect your lender putting to you. He would want to know if the loan is for mortgage for buying home or for a refinance of a home. If it were for a refinance he would want to know whether you would take cash at closing to clear off other debts and also how much you would use for it.

The lender will ask you to brief up your employment and income sources including where you work, what are your earnings, since how long you have been at job, whether your income is constant or variable. If you are person earning variable income you may have to give in details to get a good interest rate

The next thing your lender needs to know is about your previous debts and if you have any recurring debts. Additionally he will ask you about your monthly auto loan and credit card payments and how much of them are paid from your monthly pre-tax paid income.

The lender further asks if you have assets and/or cash reserves including how much money do you have in the bank, and how much will be there once you pay your down payment and processing costs, etc.

He would also want to know what your immediate down payment capacity is including how much money you are paying down and if it is owned by you or gifted by anyone or if it a grant by any agency, etc.

The lender would ask for the kind of property you wish to buy with the mortgage whether it is a condominium or a duplex and he would ask you the usage of it including if it is for living or you are buying as an investment property.

Remember these points that might work in your favor. You should be having steady employment working with the same employer for 2 or more years and in the same line of job. If you have a low debt to income ratio, it works in your favor. A ratio of 36 and less will be advantage for you. You should not be having any recent major buys including auto loans. Furthermore, if the mortgage is used for buying of a home where you wish to move in it is a plus. If you can immediately be in a position to pay down at least 5% of sale price of the property sought it will work in your favor. After closing the costs, if you can show 2 instalment amounts in your bank account it will be a plus for you.

If you are self-employed or if you work on a contract basis, and if the down payment is 3% and less with no cash left after closing the costs and if you have high debt-income ration; more than 36% and you maximized on your credit card usage, they all work against you in fetching a mortgage.