6 Questions Your Loan Officer is Going to Ask
Even if it’s not your very first home purchase, you need to be prepared to provide your loan officer with what is required. Experienced home buyers may also have forgotten all the things provided and questions asked. For this audience, here are some questions you can bet your loan officer will be asking before you get too far into the process.
Is This Your First Home?
There may be special loan programs available in your area designed specifically for first time buyers. These programs might come from a local or statewide agency that helps first time buyers in a variety of ways, not to mention some down payment assistance. It’s also important to recognize that most loan programs designate first time buyer status to those who have not owned a home in the past three years.
Are You Self-Employed?
This is another question that might seem a bit out of the blue but it’s an important one. There’s some additional paperwork and process needed for someone who is self-employed or otherwise receives income other than an employer. For instance, you might need to provide a year-to-date profit and loss statement, something that an employee wouldn’t have. Income for self-employed needs to be documented with the last two years of business income tax returns. This is a requirement because most such programs require a minimum self-employment period of two years.
How Is Your Credit?
Some might have had a recent late payment on an otherwise pristine credit report and automatically think their credit has been damaged. Be forthcoming and if there are any instances that might need some attention, explain them upfront and your loan officer will take it from there. There can sometimes be some misunderstanding of how lenders view credit so don’t take it upon yourself to make a personal determination. If there’s been a foreclosure or bankruptcy in the past, that’s something the lender needs to know in advance.
How Much Do You Make Each Month?
This is a relatively easy question to answer but also one where the lender might evaluate your monthly income differently than you. Many applicants refer to their ‘take-home’ pay because that’s what shows up in the bank account each month. However, it’s the gross monthly income that appears on your paycheck stub that matters, not the net. If you’re not exactly sure how much you make each month, your paycheck stub is all you’ll need to answer that question.
How Much Money Do You Have Available For the Transaction?
Only the accounts used for the transaction are important. This account(s) will be used for not just the down payment and closing costs involved but also some money left over referred to as ‘cash reserves.’ Lenders want to make sure you have some money left over when all is said and done and not ‘zero out’ your accounts.
When Do You Want to Close?
For purchase transactions the close date is listed on the sales contract. That is if you’ve already made an accepted offer. It also lets the loan officer know how much time is available to meet the contract date. Many ‘escrow periods’ are for 30 days and there is a property picked out. This information lets the loan officer know when to begin ordering third party documentation be done but be ready to supply absolutely everything asked for in order to meet this deadline.
-Courtesy of Realty Times, David Reed, 11/29/22