Million of mortgage applications are given to lenders each year. Some are for buyers of homes; some are for homeowners looking to refinance. All can feel "intrusive".
As part of the steps of a standard mortgage application, mortgage lenders gather basic information about anÂ applicant and, sometimes, ask questions which can seem pretty personal.
The majority of the questions are required as part of your approval. You can't get an FHA mortgage approved, for example, if you don't disclose your social security number.
Similarly, you can't get approved for aÂ HomeReadyâ„˘ home loan if you don't disclose the source of your downpayment.
And, while you don't have to answerÂ every question from the bank, avoiding certain questions can preclude you from getting approved.
Here's a quick list of the questions you should expect toÂ answer, and the questions you can choose to avoid.Click to see today's rates (Aug 25th, 2016)
As part of the mortgage approval process, your lender will ask whether you're married, single, or divorced. So, why does this matter?Â There are several reasons why.
The first reason that your marital status matters is that persons who are divorced often pay or receiveÂ alimony and/or child support; and, anything affecting your monthlyÂ income or debts requires review by a mortgage underwriter.
You may also be asked for aÂ copy of your divorce decree.
The second reason is that, in states which are "community property" states, the debts of both spouses must be considered when applying for a government-backed mortgage -- even if the application is in the name of one spouse only.
There are currently nine community property states. They are Arizona,Â California,Â Idaho,Â Louisiana, Nevada,Â New Mexico, Texas, Washington, andÂ Wisconsin.
Finally, lenders want to know your marital status because different states have different rules about how married persons can take title to their homes. Lenders want to be sure that your mortgage documents get prepared correctly.
Lenders are prohibited from discriminating against borrowers, including against the borrower's age. The Equal Credit Opportunity Act (ECOA) ensures all mortgage applicants get fair treatment.
So, why does your lender want to know how old you are? It's for accuracy on your application.
Lenders want to know your age because "age" is an input when retrieving a person's credit report; and, also because lenders need to document that you are at least 18 years of age.
If you are not 18 years of age or older, you may not be able to legally obligate yourself to a home loan. This would void your mortgage, if it was discovered after-the-fact.Click to see today's rates (Aug 25th, 2016)
After your employment and income history is requested, tucked away on the last sectionÂ of your mortgage application, is a series of questions known as "Declarations".
Mostly "yes-or-no" questions, Declarations includes the question about whether you are currently involved in a lawsuit, where "involved" means that you are either the plaintiff or the defendant.
Answering â€śyesâ€ť to the lawsuit question won't often get your loan turned down, but it will trigger a request for additional inflation, including:
The reason lenders care about this is because lawsuits carry the potential for monetary loss, and monetary loss can lead to mortgage default.
Also in theÂ Declarations section is a question about ethnicity. As a mortgage borrower, you are not required to answer this question and your mortgage approval will not be affected if you choose to leave this question blank.
The reason why mortgage lenders ask about your ethnicity is so that the government can track whether mortgage application's for a given ethnicity are being approved or turned down at an above-average rate.
When borrowers provide ethnic background information, the government can do a better job uncovering patterns of discrimination.
Lenders will ask whether you have children, and it will want to know their ages. This is because children can play a role in your loan approval and the lender won't want to miss it.
For example, when you're applying for a VA mortgage, an underwriter will verify your household's monthlyÂ residual income where "residual income" is the money left overÂ afterÂ your bills are paid each month.
Households with 2 children have reduced residual income requirements as compared to households with 5 children. Therefore, having children in your home can change your ability to get mortgage-approved.
There are other programs which use household size to help determine your eligibility. The 100% USDA home loan is one of them.
Under the Equal Credit Opportunity Act, there are certain questions a lenderÂ cannotÂ ask as part of the mortgage application process.
As one question, lenders may not ask about your health as part of your mortgage application. This is because to make a mortgage approval decision based on a person's health could be considered discriminatory by the government.
Lender are also prohibited from asking about your family planning.
Even if a borrower is visibly pregnant, the lenders cannot ask about the pregnancy as part of the mortgage application, nor can it ask whetherÂ one or both parents will "stop working" once a child is born.
For purposes of the mortgage approval, mortgage lenders are instructed to assume that all working parents will continue to work after childbirth, at the same number of hours and income.
To make a mortgage application decision based on an alternate scenario could be considered discriminatory and several lenders have paid large fines on this matter this decade.
Mortgage lenders will ask a lot of questions when you've giving a mortgage application. Be patient and answer as much as you can -- even if they bank's being a little bit nosy.
Get today's live mortgage rates now. Your social security number is not required to get started, and all quotes come with access to your live mortgage credit scores.Click to see today's rates (Aug 25th, 2016)
The information contained on The Mortgage Reports website is for informational purposes only and is not an advertisement for products offered by Full Beaker. The views and opinions expressed herein are those of the author and do not reflect the policy or position of Full Beaker, its officers, parent, or affiliates.
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2016 Conforming, FHA, & VA Loan Limits
Mortgage loan limits for every U.S. county, as published by Fannie Mae & Freddie Mac, the Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA)