Questions You Should Expect From a Lender
Job History. Most lenders want to see a two-year
history of employment and will need a contact where your job can be
verified. In some cases, according to a recent article in MarketWatch,
lenders can ask to see your diploma or college transcript in order to
verify that you were in school when you said you were.
Income. Typically, two recent paystubs are required,
but some lenders will also require tax returns, particularly if you were
self-employed. Discrepancies in income can trigger extra questions,
especially if your income has declined for some reason such as a reduced
bonus or commission. If you receive child support, Social Security or
some other payments other than wages, you'll need to provide
documentation that the income will continue.
Assets. Lenders want to know where your assets have
come from in order to ensure that you are not borrowing money from
someone for the down payment. Gift letters are required and must meet
lender restrictions if you are getting help for your home purchase.
Debts. Your debts will show up on your credit report
and will be calculated as part of your debt-to-income ratio. It's a good
idea to review your credit history before applying for a mortgage
because any disputed debts or debts that you believe have already been
repaid will require proof and may need to be erased from your credit
report before you can qualify for a loan.
Credit History. Your credit score is an important part
of your loan application, but lenders will also look at your report to
check for credit inquiries and past credit problems. If you have a
number of recent credit inquiries, lenders may ask if you have taken out
other loans or new credit cards that have yet to show up on your
report.
Unexpected Lender Questions That Are Still Legal
Ethnicity. In order to avoid discrimination based on
someone's ethnic background, the Department of Housing and Urban
Development (HUD) actually requires lenders to ask about borrowers'
race. HUD can then review lender records to make sure they aren't
routinely turning down minorities or charging them higher fees.
Lawsuits. While it may seem as if a lawsuit (especially
if you are the plaintiff) should not impact your home financing,
lenders always require applicants to ask if they are involved in a
lawsuit because of the potential cost and the possibility of a judgment
that goes against the borrower.
Divorce. Lenders are particularly concerned about the
financial details of a divorce because of the possibility that a
borrower could be held responsible for an ex-spouse's debt. In addition,
if you are trying to include child support or alimony as income on your
loan application, a lender will need some hard proof that the income
will continue.
Questions You Can't Be Asked
While it may seem that a lender can ask a borrower anything, there are
two topics that are forbidden for lenders to investigate: family
planning and health issues. According to HSH.com, under the Equal Credit
Opportunity Act, lenders are not allowed to ask if you are planning a
family. In the past, this question was used to discriminate against
female borrowers because lenders assumed women would quit work when they
became pregnant.
You can, however, be asked about how many dependents
you have and about your marital status, because that is information that
can be used to qualify you as a first-time homebuyer and for special
loan programs that have income limitations.
Under the Fair Housing Act and the Americans With Disabilities Act,
lenders are prohibited from discriminating against borrowers who are ill
or disabled, so they are not allowed to ask you any questions related
to your physical condition.
The Bottom Line
Every borrower today needs to be prepared to answer almost anything a
mortgage lender asks, but if you feel you are being asked inappropriate
questions you should ask your lender some questions in return and
perhaps find another lender.
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