If Another Mortgage is in Your Future, Be Prepared!
Named by the National Association of Realtors® as one of “The Twenty-five Most Influential People in Real Estate” Julie speaks internationally on real estate trends, consumer centricity and real estate agent profitability.
Another Mortgage in Your Future
If it’s been years since you prepared for a mortgage loan interview, don’t assume that it’s the same world of lending. Mortgage practices have changed and streamlined and you need to be armed with facts, figures, and information when you first visit the lender. Jumping into the loan process unarmed can cost you time, headaches, even money in the form of higher interest.
In this article we’ll explore what you’ll need to pull together to “wow” the lender when applying for a new mortgage loan. Although documentation might vary based on the type of loan you’re seeking as well as the lender you’re using, if you pull information together prior to your first visit with the lender, you’ll be in good shape.
There are five categories of information you’ll provide the lender.
The lender needs information on these first two categories, personal and employment, in order to verify that you are the person you say you are; but this will also help determine your stability and that you take your responsibilities seriously.
If it’s been a while since you’ve last run the mortgage loan gauntlet, you may be surprised to find that even though it still feels like you’re providing a mountain of information, much of it (like your employment, income, and bank deposits) can be quickly verified. This is done by hard copies of information you bring to the lender (like your checking and savings account statements) or by the lender checking via telephone, fax, or electronic means. The days of snail-mailing employment verifications to the employer are all but dead and gone (thank heavens!)
Next come your assets. The lender will want a complete accounting including savings, mutual funds, RRSP’s—even personal property like boats and motor homes. Borrowers often wonder why this question comes up—but it’s for a good reason. The lender can determine how well a borrower accumulates assets and can see that you have other financial resources besides what you’re using for the down payment (which could be the equity from your previous home or a home sale that’s closing soon.)
The lender needs to know about other real estate you own as well. The equity in that property may be viewed as an asset in your financial picture.
So what debts do you disclose? When in doubt, spell everything out! These include credit card accounts, installment loans, like car payments, student loans—even loans you’ve signed as a co-borrower or a co-signer. Based on the size of the obligation (and the payment time remaining), the lender will determine if these affect your qualifying picture. The lender will need to know how much you owe, how much you pay monthly, the account numbers and where payments are made.
If your previous home is sold and closing, the lender will want information about it as well. Be prepared to tell the lender approximately how much you’ll net from the sale and when the closing is scheduled to occur.