It’s in the nature of mortgage companies to be risk averse. This means that as a borrower, you are expected to prove that you will be able to pay off your loan fully based on the terms of your mortgage. This helps your lender determine the likelihood of you paying off the mortgage, allowing lenders to get their money back with interest.
Expect These 5 Questions from Lenders
To increase the likelihood of your loan getting approved, here are five questions typically asked by lenders to loan applicants.
- What is your job history? Proving that you have a stable and low-risk job goes a long way in establishing your credibility as a borrower. Some lenders will require a minimum of three years of employment with the same company, while others may only need as little as three months. The requirements can vary between states, job industries, or even specific lenders.
- How much is your income? Along with your job history, your income is among the biggest factors that determine whether a lender will approve your home loan. Proving your income will typically come down to a few recent pay stubs, if you are working as an employee of a company, that is. In the case of freelancers and the self-employed, most mortgage lenders will require updated tax returns.
- Do you have any record of debts? Contrary to popular belief, not having any debt is not necessarily good for you when it comes to securing a mortgage. This is because lenders are usually looking for a good history of debt repayments—and never having any debt means no history at all! That being said, having no history of debt does not mean a disqualification, especially if you’re applying for a loan as a first-time home buyer, as they typically have access to state programs, tax breaks, and federally backed loans.
- What’s your credit score? Your credit score is determined by several things, including debt-to-income ratios, recent credit inquiries, and your overall credit history. If you have several recent credit inquiries, then a lender will probe by asking whether you have opened any new credit cards or taken other loans that have not yet been recorded on your official credit report. Recent credit inquiries can be bad for you as well, as it might tell lenders that you are in desperate need of cash. Trying to open new credit accounts may signal that you are not in the best financial position, which could result in a lender disapproving the mortgage loan you’re trying to push forward with.
- Are you currently in the middle of a lawsuit? This is one of the rarer questions that come up during the loan application process, but it’s nevertheless crucial to the results. Some lenders have to ask about this because lawsuits can be very expensive—even for the plaintiff! The risk is even bigger if the borrower is a defendant. This is because of the possibility of a judgment going against the borrower, along with the damages that come with the verdict. The monetary loss following a lawsuit can be tremendous and may affect one’s ability to pay their loans.
Your Phoenix Mortgage Lender Desert Springs Mortgage
Depending on your credit history and overall financial situation, securing a mortgage can be a difficult process. If it’s your first time securing a loan, chances are the cards may be stacked against you.
Mortgage applications can be easier if you’re working with the right mortgage lenders. Make sure to find a lender who will work hard to match your needs with the ideal type of loan.
Desert Springs Mortgage is the go-to for home loans in Phoenix, Arizona. We offer everything from conventional to VA, USDA, and reverse mortgages, among others. Contact us today at (623) 432-1309 to learn more.