Applying for Your Home Mortgage

It's normal to feel some anxiety when facing a mortgage lender. This person has a lot of power! They can decide to grant the loan and make it possible for you to own the home of your dreams, or they can crush your dreams by denying the loan. It's normal to feel vulnerable when you're facing a mortgage lender.

The good new is, there's help on the way! Being prepared for your mortgage interview and having all the necessary documents at hand will go a long way to dispelling your anxiety.

The most important thing to realize is that the mortgage lender is on your side. Yes, really! The lender makes his or her living by successfully working with people who need mortgages. The lender wants you to have this mortgage, and will often go to great lengths to help you. Keep in mind that the mortgage broker or lender is your ally, not the enemy!

Schedule at least an hour to spend with your lender. If you have children, leave them with a babysitter. An hour is a long time for young children to be quiet. They'll probably get bored and rambunctious, and you'll become distracted!

Be truthful with your lender. Many problems including poor credit, being self-employed or changes in employment can be overcome as long as the lender knows about them. Some lenders even specialize in handling clients with previous foreclosures, and bankruptcies! But, your lender can't help you with a problem that he or she doesn't know about. From a lender's perspective, the worst thing that can happen is to discover a major problem with the loan that they were unaware of. Your lender can do a better job for you if he or she has all the information.

Lenders are most concerned with your financial history in the past two years. They'll look at a number of financial factors including:

-Income
-History
-Credit
-Assets

Income

The first factor that lenders usually look at is your income. They'll consider your job stability and income over the past 2 years. Normally, they will look at your tax returns over the past two years, with W-2s and paycheck stubs.

History

Your history of financial payments for housing is especially important to lenders. If you currently rent, they'll check to see if you've paid your landlord on time each month. Many property owners don't report to credit bureaus, so they'll verify your history. Come prepared with your landlord's name, address and phone number. If you own your current home, the lender will check that you've made your mortgage payments on time.

Credit

The lender will check your credit history including payments for car loans, credit cards and other types of loans. Usually, this is done through a major credit bureau.

Assets

Assets are, very simply, the amount of cash, stocks, equity, savings and other funds that you have been able to accumulate. Lenders prefer clients who are able to save regularly from their paychecks. Your capital includes the down payment for your mortgage, plus your savings. One way to document your assets is to bring 3 months of bank statements, brokerage statements, and savings account statements to the meeting. You should also bring documentation for any profit-sharing plans that you belong to, or any investment plans.

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