Whether buying your first Tulsa home or your fifth one, you will most likely deal with a loan officer at some point. They need certain information to help them lead you toward the right programs for your home purchase. That means asking you many questions. Here are a few of the main questions your lender may ask and why they ask them.
What Will Your Loan Officer Ask You and Why?
Is This the First Home You Ever Bought?
Like snowflakes and fingerprints, each lender is unique. They offer different terms and a variety of programs that cater to specific financial scenarios. Your lender may offer special programs to help first-time homebuyers obtain a loan, including possible assistance with your down payment. In real estate terms, a “first-time homebuyer” is someone who has not owned a home in the last three years. So, even if you owned a home a while ago but sold it and have not purchased another one in at least the last three years, you are considered a first-time homebuyer and, therefore, possibly eligible for first-time homebuyer programs.
How Would You Categorize Your Credit?
Excellent? Fair? Poor? No idea? Your credit score factors into whether your lender approves your loan as well as the terms of your loan. The better your credit score, the better your interest rate. Be honest. If you had some issues in the past or are currently dealing with some financial issues, let your lender know. They take this information and look for programs that fit your exact situation. At the very least, they can provide advice on what particular issues to tackle first and how to address them in order to set yourself up for buying a Tulsa home in the future.
What Do You Earn Your Income?
If you work for a company and receive a W2, loan paperwork is pretty standard stuff. But if you are self-employed, the lender requires some additional paperwork from you for proof of income. That also includes retired individuals. Self-employed borrowers must show two years of personal income tax returns, two years of business tax returns, a current year-to-date profit-and-loss statement, and/or a balance sheet. If you’ve been self-employed for less than two years, you may find it difficult to obtain a home loan. Retired borrowers must provide the lender with their federal income tax returns, letters from organizations that provide the retirees their regular income, a Benefit Verification Letter, etc. Your loan officer will let you know what you need to provide the appropriate proof of income.
How Much Money Do You Make?
Seems like an obvious question, right? But what you consider your “income” may not be the same as what your loan officer considers as your “income”. You may only think of your take-home pay (aka “net pay”) as your income. But lenders want to know your gross pay. This helps them calculate your debt-to-income. Lenders like to see a DTI of 36% or less. Fortunately, your paycheck stub and your tax returns provide this information.
How Much is Your Down Payment?
Financial experts suggest putting 20% of the home’s sale price down. But some programs require as little as 3%. VA loans require zero down. But a higher down payment lowers your monthly mortgage payment. It also may affect your terms. You also need to include your closing costs, inspection fees, and at least a little extra in your reserves. Otherwise, you risk denial of your home loan.
How Quickly Do You Wish to Close?
Finally, your loan officer wants to know your timeframe for the purchase. Need more time or less? Thirty days? Forty-five days? They need a date to start the paperwork. Everything works on a schedule. But they cannot get started until they have an official timeframe.
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