Just the thought of buying a home can cause anxiety in some people. For many people, it is the fear of the unknown that brings this about. One of the unknowns is usually based on not knowing what types of questions the lenders may ask of you during the loan application process. Here are some of the more common questions that you can expect to see and have to answer as you move through the loan process.
Keep in mind that not all applications or paperwork will have all of these questions.
Employment and Income: You will certainly see questions about this. You can expect to see:
• Where do you work?
• How much money do you make per week, per year?
• How long have you been at this job?
• Are you paid by the hour, salary, commissions?
• Do you have pay stubs available for review?
What are your Outstanding Debts: This is another of the “will see” questions. It is best to gather up all of this information beforehand to make filling out the application easier.
• What recurring (or revolving) debt do you have?
• How much do you pay a month in car loans?
• How much do you pay a month in credit card loans?
• How much do you pay in rent or home loans?
Assets and Cash:
• How much cash do you have in the bank?
• Do you have other assets such as stocks or bonds?
Down Payment Plans:
• How much money can you put down?
• Will you need to borrow this money?
• Are you using a VA or FHA loan?
• How many points can you pay?
Reason for the Loan:
• Are you buying or refinancing?
• If refinancing, do you expect cash at closing?
• If so, how much?
Use of the Property:
• Will this be your primary residence?
• Is this an investment property?
What Kind of Property Is It:
• Single family home or condominium?
• A duplex or some other type of structure?
The above are just a few of the most commonly asked questions. How you answer these questions will go a long way in whether or not the lender will work with you.
You should not be dishonest on the application because all answers will be verified, but here are some of the issues that may cause problems that you may want to work on before submitting your application.
If you are self-employed you may be required to present past financial records and tax forms.
If your credit cards are at the limit, you may want to pay them down before seeking a home loan.
If the property you want to buy is to be used for anything other than your primary residence, you may need to provide more information as to what you plan to do with it.
It is a very good idea to have enough cash in the bank so that after down payment and closing costs you still have 3 months of payments left over. This will look good to the lender.
Knowing the questions beforehand can help you be better prepared for them when you fill out your applications and do your research. Be honest and be patient and that home you want may be closer than you think.