If Another Mortgage is in Your Future, Be Prepared!
By Julie Garton-Good
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 first category of information is about you (and any co-borrower on the loan.) This will include SIN, date of birth, home phone, marital status, number of dependents, and the number of years you attended school. Last in this category, you’ll be asked for your current address and anywhere else you’ve lived during the past three years.
The second category of information is about your employment. Here you’ll need to give the name, address and phone number of your current employer and information about other jobs you’ve held in the past three years. In addition, you’ll be asked to list the type of work as well as the position. If you’ve had prior positions in this line of work, you’ll need to give your salary amount for those jobs. This shows how you’ve progressed in your career and the wage increases you’ve earned. Don’t forget that education in your line of work could count towards your employment track record as well. At the very least, the lender could consider your training to be what lenders refer to as a “compensating factor”, allowing you to qualify for a larger loan size or perhaps a lower interest rate.
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!)
The third category of information deals with your income and assets. You’ll be asked to give your gross monthly income (which could include overtime, bonuses, commissions and any net rental income.) If you receive alimony, child support or separate maintenance income, it can be considered for loan .
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.
The Fourth category of information is your Debts, the lender will ask you about the least-favorite area of your financial picture—your debts. This is absolutely not the time to “forget” that you owe a debt. The thorough process that the lender uses will more than likely uncover the true story. In fact, you will be asked to sign the loan application stating that you have told the truth.
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.
The fifth category of information has to do with the house you’ve selected and the house (if any) you’ve sold. If your offer has been accepted on a home, you’ll need to provide the lender with a copy of the purchase agreement. This should show the street address, legal description, as well as the names under which you’ll take title. If you’re applying for a construction loan, you’ll need even more information about the lot, the plans and any outstanding loans on the property.
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.
Well, there you have it – a bird’s eye view of just what you’ll need to document for your next mortgage loan application. If you have everything together when you first meet with your mortgage consultant, you’ll find that the loan processing time may be trimmed and the sailing much smoother for your next mortgage.
For more information contact The Wilson Team or call 613-695-9250
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