6 Crucial Mortgage Questions to Ask

Nations Lending’s experienced mortgage advisors are great at setting our borrower’s expectations and asking questions up front. We tell potential borrowers that if they are in the market to purchase or refinance a home, there are questions our clients will be asked. Some answers will potentially complicate the process, meaning more documentation will be required.

1. Where does a client work, how long have they been there, and how much do they earn? Our mortgage advisors tell clients that they will need copies of pay stubs, W-2s and income tax statements. Self-employed or a contract worker will require additional documentation.

2. What recurring debt does the client have? How much do they pay a month for auto loans and credit cards? The optimum answer to these questions is their monthly debt payments account for 36 percent or less of pretax income, and they haven’t made a major purchase (like a car) recently. Obviously, the less owed the better.

3. How much money does the client have in the bank? They should be told that they will be asked to provide copies of bank statements.

4. How much do they have saved in stocks, bonds, mutual funds and other assets? They will need to provide copies of brokerage statements. It will become a more challenging process if the client will have little cash in the bank after paying for the down payment and closing costs.

5. What is the size of the down payment? Where does the down payment money come from? Is it all from savings, or did some of it come as a gift from family or a grant from a nonprofit? Borrowers will have to document the source of their down payment by providing copies of several months of bank and brokerage statements, and letters from gift-givers and grant makers.

6. Does our client plan to live in the house year-round, or is it investment or vacation property? Is it a house, duplex, condominium or co-op? A detached single-family home to be used as a primary residence is a great deal less complicated transaction.

And so it goes. But as mentioned above, our loan officers are good at asking questions up front, and making sure the answers make sense.