When you apply for a mortgage, there are several questions that a lender may ask that you can prepare for. They will want information relating to:
The primary information they will need.
- Employment and income
- A summary of your outstanding debts
- Cash reserves, bank account cash, investments, and other assets
- The down payment that you have on the property you are purchasing and is it your own money
- Will the loan also be to consolidate any debts?
- What will be the use of the property?
- 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?
- 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 debts, 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?
- A condominium?
- A duplex?
- A single dwelling?
Responses that 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 per cent or less.
- The mortgage is only for a home purchase.
- My down payment of at least 30 per cent of the sales price with my own money.
- The cash reserves will pay several months of the mortgage payments once the property closes.
Responses that 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 per cent.
- The property will be renovated for rental use.
- The liquid cash situation is tight once everything is paid after we close the deal.