Initial Meeting With A Mortgage Lender

The mortgage loan approval process generally begins with an initial meeting at which the prospective home buyer and the mortgage lender discuss the potential loan. Bring information to verify your income and long-term debts.

Often people prefer to meet with the mortgage lender before house hunting to determine in advance what price range they can realistically afford and the mortgage amount for which they can qualify. This step is called prequalification and can save you much time and trouble by assuring you are looking in the appropriate price range.

What To Bring To Qualify With A Mortgage Lender

For your best shot to qualify for that mortgage, plan to bring the following to the first meeting with the mortgage lender:

• A purchase contract for the house, if you have one.
• Your bank account numbers and the address of your bank branch, along with checking and savings account statements for the past two to three months.
• Pay stubs, W2 withholding forms, tax returns for two years, or other proof of employment and income verification.
• Divorce settlement papers, if applicable.
• Credit card bills for the past few billing periods, or canceled checks for rent or utility bill payments, to show payment history and amount of revolving debt.
• Information on other consumer debt, such as car loans, furniture loans, student loans and retail/credit cards.
• Balance sheets and tax returns, if you are self-employed.
• Any gift letters, if you are using a gift from a parent, relative or organization to help cover the down payment and/or mortgage closing costs. This letter simply states that the money is in fact a gift and will not have to be repaid.

Having these items on hand when you visit the mortgage lender should help speed up the application process, and improve your chances to qualify. Usually, you'll need to pay an application fee and appraisal fee when you submit the mortgage application. This is done only after you've negotiated successfully on a home and the seller has accepted your offer. Generally, there is no fee for prequalification.

After the initial meeting with the mortgage lender, you should have a general idea if you qualify for the size and type of loan you want. The mortgage lender should let you know if you qualify for the mortgage loan in 30 to 60 days. If you are denied a home loan, the mortgage lender must explain the reasons you did not qualify. If this happens, the mortgage lender usually will discuss any options with you.

Two Key Factors To Qualify With A Mortgage Lender

In attempting to approve home buyers for the type and amount of mortgage they want, lenders basically look at two key factors: the borrower’s ability and willingness to repay the loan. Ability to repay the mortgage is verified by your current employment and total income. Generally speaking, mortgage lenders prefer for you to have been employed at the same place for at least two years, or at least to have been in the same line of work for a few years.

The borrower’s willingness to repay is determined by examining how the property will be used. For instance, will you be living there or just renting it out? Willingness also is closely related to how you have fulfilled previous financial commitments, thus the emphasis on the credit report or rent and utility bills.

Remember: The Mortgage Lender Wants This Deal

It is important to remember that there are no rules carved in stone. Each applicant is handled on a case-by-case basis. So even if you come up a little short in one area, perhaps one of your stronger points will make up for the weak one. Everyone involved in real estate is in the business of selling homes, in one way or another. Therefore, if the loan makes sense, lenders and insurers will do their best to see that you qualify.

Source: U.S. General Services Administration