When you apply for a mortgage, there are several questions that a lender may ask, for which you can prepare. They will want information relating to:
The primary information they will need.
1. Employment and income
2. A summary of your outstanding debts
3. Cash reserves, bank account cash, investments, and other assets
4. The down payment that you have on the property you are purchasing, and is it your own money
5. Will the loan also be to consolidate any debts
6. What will be the use of the property
7. What is the equity you now have in your current home, if applicable
Employment and income.
- Who is your employer?
- How much income do you make, and can you provide payment receipts/stubs?
- How long have you been working at your job?
- Is your income a salary or other income such as sales commission?
Your liabilities.
- What are your outstanding debts?
- What commitment level per month do you have to pay debts?
- What is the cost per month for auto loans?
- How much of your income goes to pay off credit cards, and what is the gross credit card debt?
- How much money will be left after you pay for your down payment and closing costs?
- If you are refinancing debt, how much debt will your mortgage cover and reduce your equity?
What you will use the real estate for:
- Will this be your residence?
- Will you rent a portion of the home out?
- Is it an investment property?
Property type
- A condominium?
- A duplex?
- A single dwelling?
Replies which can work in your favour:
- I have steady employment with the same employer for two-plus years.
- I carry little debt with a debt-to-income ratio of 25% or less.
- The mortgage is only for a home purchase.
- My down payment of at least 30% of the purchase price with my own money.
- The cash reserves will pay several months of the mortgage payments once the property closes.
Replies which can work against you:
- Self-employed or contract worker.
- High debt with credit cards maxed out, with a total debt-to-income ratio of more than 30%.
- We intend to renovate the property for rental use.
- The liquid cash situation will be tight once all expenses are paid after we close the deal.