When you go to a mortgage lender for prequalification or preapproval, the process will largely consist of questions. By asking you these questions, they’ll gauge your overall financial situation as well as your reliability and responsibility as an individual. In the end, they’ll use what they’ve learned about you to offer you a loan they’re confident you can repay. Here are the type of questions you should be prepared to answer.
What Questions Will a Mortgage Lender Ask?
Typically, the questions that a mortgage lender asks pertain to the following areas.
Credit and Work History
If you have good credit without anomalies and a clear work history without large gaps, that will work in your favor. If the lender sees any bankruptcies or strange trends in your employment history, they’re sure to ask questions. Take note of any such issues and have a prepared explanation, whether you want to point to extenuating factors or simply own a past mistake.
Assets, Income, and Debt
Your overall assets, financial resources, and their balance with your debt is of principal interest to a mortgage lender. They’ll ask questions about your income, job stability, what shape your savings are in and how much debt you owe.
There are a handful of different questions that a mortgage lender will ask about your down payment. For one, the size of the down payment that you’re putting toward the purchase is important. If it’s 20% or greater, that will work in your favor, although the average first-time homebuyer makes do with a 7% down payment. They’ll also ask about the source of your down payment, whether it comes from your own savings or from a gift or unclear source.
Buying vs Refinancing
Mortgage loans are used for buying homes, but also to refinance them. Mortgage lenders are often hesitant to participate in refinancing, and relatively more inclined to lend to a home buyer.
The Type of Property
Some property types are perceived as simpler and easier to purchase. This means condominiums, duplexes, etc. Single-family homes are seen as the most clear-cut case for a mortgage lender, and a mortgage lender will not raise their eyebrow at such a purchase. However, they might just ask questions about alternative types of residences.
Your Intentions With the Property
A mortgage lender will be highly concerned with how you intend to use the property. Be prepared to have them ask whether this is a home you’ll live in, a vacation home, or an investment property. If it’s an investment property or vacation home, you’re sure to face extra scrutiny for a variety of reasons. Financial conditions that are acceptable when someone is making a long-term, money-saving investment in their own home may not be acceptable if you want a mortgage for something that is essentially a luxury.
Call Potempa Team
Do you feel like you’re not prepared to meet with your mortgage lender? If so, get in touch with Potempta Team. We can give you more insight into what questions mortgage lenders will ask, and we can also offer loans ourselves. If you’re interested in buying a home, look into our prequalification and preapproval services for loans.