When purchasing a home in Markham, you will work closely with a mortgage lender to receive the proper financing. The lender’s job is to determine if you qualify for a home loan. They must make sure you can actually afford the home you wish to purchase and you are not a risk.
To help your lender make this decision, he or she will ask you several questions and request many documents. Here are just a few of the questions and documentation you must provide when applying for a home loan.
1. Where Do You Work?
One of the first and most important questions you will be asked is about your current employment and income. Lenders want proof that you have a stable income and that you have the means to pay off the loan. They will likely ask many follow-up questions such as:
- How long have you been at this job?
- Where have you worked in the past three to five years?
To prove your employment, you will have to provide pay stubs or other requested documents. If you are just beginning a new job, you may need a letter from your new employer stating your salary and start date.
2. How Much Do You Earn Each Month?
A lender’s job is to determine how much financing you qualify to receive based on your current financial situation. To do this, they will take a close look at your income. They will ask that you provide documentation showing how much you earn each month as well as other sources of income.
3. What Can You Tell Me About Your Assets and Cash Reserves?
Lenders need to know about your assets and your cash reserves. When talking about your assets, this helps the lender determine just how much you can borrow. Knowing about your cash reserves also gives them confidence that you have enough money to provide a down payment, closing costs, and pay your monthly mortgage payments and other bills.
4. What is Your Debt-to-Income Ratio?
Your debt-to-income ratio plays a critical role when qualifying for a mortgage. This number adds all of your debts including your consumer debt, student loans, auto loans, etc., and divides it by your monthly income. If this number is too high, your lender may not approve your loan and will ask that you decrease your debt before purchasing a home.
Documentation is critical for your lender as it will provide answers to many questions he or she may have. However, a few additional questions you should be prepared to answer include:
- Have you had a mortgage loan before?
- Have you previously filed for bankruptcy?
- What is your current credit score?
- Do you currently pay any child or spousal support?
- How many credit cards do you have opened and what are their current limits and balances?
After talking to your lender and receiving pre-approval, give Markham real estate agent Martin MacFarlane a call. He is ready to help you find your dream home.