Selling Your Home in 2015? Boost Your Resale Value with These Three Inexpensive Renovations

Most buyers need some sort of financing to purchase a home.  The thought of talking to a lender representative can be quite unnerving unless you realize that they have your best interests in mind.  Their goal is to make sure that you are able to obtain financing, or get you on the road to ownership.

It reminds Kelly and me of speed dating.  I “never tried it” but I heard that it can be quite effective at eliminating the ones you don’t want to date, but it doesn’t guarantee that the person you are interested in is not eliminating you!  The point is, it doesn’t take a lot of time, just the right questions and answers, to quickly determine whether you can wisely move forward with a loan.

When you talk to a lender’s representative, either in person or on-line, the first thing they will do for you is prequalify you.  This does not mean you are guaranteed a loan, but based on what you have told them and their own investigation, they tell you what price home you are likely able to buy, based on down-payment and monthly payment and will provide you documentation you can use with an offer to prove your capability to buy.

The prequalification process is quick and simple, and in some cases can be done entirely on line.  To prepare you for this process, here are some questions you can to expect to be asked.

How long have you been with your current employer?

This presumes you are employed currently.  This first question is designed to help the lender understand your employment history, your longevity at your current job and the number of paychecks you have received.   As you might imagine, starting a new job is the most difficult time to get a loan.  Also, if you change jobs frequently that can be a flag as well.  If you are self-employed, lenders typically want you to have two years of financials including tax returns for review.

What do you make each month and how are you paid?

It is extremely important that you provide accurate information to your lender in answering this question.  The lender will use this information not only to determine if you can get a loan, but also how much you can afford in a mortgage each month.  They need to assure the lending company that you are in a position to make consistent payments each month.  They will want to know if you are paid by the hour, or if you are salaried, commissioned or both.  This information needs to be the gross amount before deductions and taxes, in order for them to make the most accurate assessment.

To whom do you owe money?

We have all had debt at some point in our lives, whether a car payment, credit cards, student loans or even just the money you borrowed from your parent s for that nice vacation.  The lender is going to ask you about these debts to see how much you are paying each month for each, and how much of your income is used to pay these debts.  These debts would be different from power bills and other monthly charges, as these can be stopped and no residual debt exist.

The level of debt you have compared to your income will affect your loan options.  Even if you have good credit, and good income, if you have significant monthly debt load, you may not be able to get a loan, or it may be for only a smaller home that you are wanting.  If this happens the lender may recommend you wait and do some debt reduction before getting a mortgage so you can meet your home buying goals.  The bank will compare your debt to your income to help decide how much of a mortgage you can afford, so beware of making significant revolving credit purchases close to the time you are considering a home.

How are your bank accounts looking?

Different mortgages require different levels of down-payment commitment by you, the buyer.   These can run from 0% to a more common 3-5%, with a conventional loan being in the 10-20% Down-payment range.  Additionally, there will costs associated with the actual closing of the transaction, where the deed is transferred from seller to buyer.  Most of these are bank fees and costs associated with obtaining a loan, but there are attorney fees as well.  Even if you expect to ask the seller to help with the closing costs, or may be gifted some of the down-payment, the lender is going to be asking about your current financial situation.

You can expect the lender and its agents to keep all of your information confidential, and most importantly, to give you good advice and direction based on what you tell them.  Accuracy and honesty can alleviate significant future problems, so be prepared with the answers to these questions before you call.  You will be glad you did.