What Will My Mortgage Lender Ask Me?
The complex and often frustrating financial questions involved in buying and selling a home often require expert help to work through, but let’s not forget how with the basics. Many prospective homeowners have no experience when it comes to applying for a mortgage, let alone more involved real-estate decisions. To start, here are five questions a mortgage lender is going to ask you why.
Obviously mortgage lenders are going to want to know that their clients are over the age of 18, but that is really the end of the story here. It is illegal to discriminate based upon age and many other factors thanks to the Equal Credit Opportunity Act, so never feel pressured on these questions. The only wrong answer is “I’m under 18 and legally can’t buy a mortgage.”
This question may raise a few eyebrows for first-time buyers, especially in our current social climate, but the reason is more encouraging than worrying. Lenders will ask your ethnic background because government agencies and researchers monitor how often mortgage loans are approved for different ethnic groups. This helps identify areas where racial bias might be an issue. Also, it is perfectly acceptable to refrain from answering this question if you so choose.
Big take away on this sub-topic – basically they just have to disclose if they are obligated to pay alimony, child support, or separation maintenance , since these are debts and can affect repayment ability.
Lenders are going to want to know your marital status because of all the differences a marriage can make when it comes to personal finance and taxes. They will also ask about any divorces that may involve alimony payments. Lenders will not ask you if you are in a relationship, so feel free to disclose what you feel comfortable with. Sometimes it is helpful to be forthcoming about more serious relationships, and there is usually no downside to disclosing them. They will also ask about any children that you may already have, but cannot ask you about plans for children in the future.
Above everything else, lenders want to make loans to people that can repay them. That is after all, their business. Standard practice on this front is to obtain a full credit history and credit check on people applying for their first mortgage. Questions about credit are also for the benefit of you, the buyer. Things can go quite wrong when mortgages are given to those who cannot actually pay them, as the 2008 crisis reminds us.
Going hand-in-hand with credit questions are income questions. Your income, and that of your partner, is how you will be able to pay off your mortgage in the future. Banks will use underwriters to help them assess your credit and your income. When it comes to income, their results can differ somewhat from your own numbers. Underwriters can weigh and consider different sources of income differently. For example, established salaried pay from a long-term job will be assessed differently than a startup business that may have grown significantly over.
You’ll be asked plenty of questions by your mortgage lender but all in good faith. Our mortgage brokers are here to help you navigate the complicated journey of home ownership. Give us a call at 303-779-0591 to learn more!