2. Can I apply for a loan before I find a property to purchase?
Yes, applying for a mortgage loan before you find a home may be the best thing you could do! If you apply for your mortgage now, we'll issue a pre-
qualification subject to you finding the perfect home.You can use the pre-qual letter to assure real estate brokers and sellers that you are a
qualified buyer. Having a pre-qual for a mortgage may give more weight to any
I am selling my current home to purchase this home. What type of documentation will be
required? If you're selling your current home to purchase your new home, we'll ask you to provide a copy of the settlement or closing
statement you'll receive at the closing to verify that your current mortgage has been paid in full and that you'll have sufficient funds for our
closing. Often the closing of your current home is scheduled for the same day as the closing of your new home. If that's the case, we'll just ask you
to bring your settlement statement with you to your new mortgage closing.
I'm purchasing a home, do I need a home inspection AND an appraisal?
• The appraiser will make note of obvious construction problems such as termite damage, dry rot or leaking roofs or
basements. Other obvious interior or exterior damage that could affect the salability of the property will also be
reported.
• Both a home inspection and an appraisal are designed to protect you against potential issues with your new home.
Although they have totally different purposes, it makes the most sense to rely on each to help confirm that you've found
the perfect home.
• However, appraisers are not construction experts and won't find or report items that are not obvious. They won't turn on
every light switch, run every faucet or inspect the attic or mechanicals. That's where the home inspector comes in. They
generally perform a detailed inspection and can educate you about possible concerns or defects with the home.
• Accompany the inspector during the home inspection. This is your opportunity to gain knowledge of major systems,
appliances and fixtures, learn maintenance schedules and tips, and to ask questions about the condition of the home.
Purchase Questions
3. I'm self-employed. How will you verify my income?
Generally, the income of self-employed borrowers is verified by obtaining copies of personal (and business, if applicable) federal tax
returns for the most recent two-year period. However, based on your entire financial situation, we may not need full copies of your
tax returns. We'll review and average the net income from self-employment that's reported on your tax returns to determine the
income that can be used to qualify. We won't be able to consider any income that hasn't been reported as such on your tax returns.
Typically, we'll need at least one, and sometimes a full two-year history of self-employment to verify that your self-employment
income is stable.
Will my overtime, commission, or bonus income be considered when evaluating my application?
In order for bonus, overtime, or commission income to be considered, you must have a history of receiving it and it must be likely to
continue. We'll usually need to obtain copies of W-2 statements for the previous two years and a recent pay stub to verify this type
of income. If a major part of your income is commission earnings, we may need to obtain copies of recent tax returns to verify the
amount of business-related expenses, if any. We'll average the amounts you have received over the past two years to calculate the
amount that can be considered as a regular part of your income. If you haven't been receiving bonus, overtime, or commission
income for at least one year, it probably can't be given full value when your loan is reviewed for approval.
I am retired and my income is from pension or social security. What will I need to provide?
We will ask for copies of your recent pension check stubs, or bank statement if your pension or retirement income is deposited
directly in your bank account. Sometimes it will also be necessary to verify that this income will continue for at least three years
since some pension or retirement plans do not provide income for life. This can usually be verified with a copy of your award letter. If
you don't have an award letter, we can contact the source of this income directly for verification. If you're receiving tax-free income,
such as social security earnings in some cases, we'll consider the fact that taxes will not be deducted from this income when
reviewing your request.
If I have income that's not reported on my tax return, can it be considered?
Generally, only income that is reported on your tax return can be considered when applying for a mortgage unless, of course, the
income is legally tax-free and isn't required to be reported. If need be, there may be other ways of verifying your income and a
bank representative will make that determination upon reviewing the details of your application.
How will rental income be verified?
If you own rental properties, we'll generally ask for the most recent year's federal tax return to verify your rental income. We'll
review the Schedule E of the tax return to verify your rental income, after all expenses except depreciation. Since depreciation is
only a paper loss, it won't be counted against your rental income.
Income Questions
4. I have income from dividends and/or interest. What documents will I need to provide?
Generally, two years personal tax returns are required to verify the amount of your dividend and/or interest income so that an
average of the amounts you receive can be calculated. In addition, we will need to verify your ownership of the assets that
generate the income using copies of statements from your financial institution, brokerage statements, stock certificates or
Promissory Notes. Typically, income from dividends and/or interest must be expected to continue for at least three years to be
considered for repayment.
Do I have to provide information about my child support, alimony or separate maintenance
income? Information about child support, alimony, or separate maintenance income does not need to be provided unless you
wish to have it considered for repaying this mortgage loan.
Will my second job income be considered?
Typically, income from a second job will be considered if a one-year history of secondary employment can be verified.
I've had a few employers in the last few years. Will that affect my ability to get a new
mortgage? Having changed employers frequently is typically not a hindrance to obtaining a new mortgage loan. This is
particularly true if you made employment changes without having periods of time in between without employment. We'll also look
at your income advancements as you have changed employment. If you're paid on a commission basis, a recent job change may be
an issue since we'll have a difficult time of predicting your earnings without a history with your new employer.
I was in school before obtaining my current job. How do I complete the application?
If you were in school before your current job, enter the name of the school you attended and the length of time you were in
school in the "length of employment" fields. You can enter a position of "student" and income of "0."
I am relocating because I have accepted a new job that I haven't started yet. How should I
complete the application? Congratulations on your new job! If you will be working for the same employer, complete the
application as such but enter the income you anticipate you'll be receiving at your new location. If your employment is with a new
employer, complete the application as if this were your current employer and indicate that you have been there for one month.
The information about the employment you'll be leaving should be entered as a previous employer. We'll sort out the details after
you submit your loan for approval.
Income Questions
5. Credit Questions
What is a credit score and how will my credit score affect my application?
A credit score is one of the pieces of information that we'll use to evaluate your application. Financial institutions have
been using credit scores to evaluate credit card and auto applications for many years, but only recently have mortgage
lenders begun to use credit scoring to assist with their loan decisions.
Credit scores are based on information collected by credit bureaus and information reported each month by your
creditors about the balances you owe and the timing of your payments. A credit score is a compilation of all this
information converted into a number that helps a lender to determine the likelihood that you will repay the loan on
schedule. The credit score is calculated by the credit bureau, not by the lender. Credit scores are calculated by comparing
your credit history with millions of other consumers. They have proven to be a very effective way of determining credit
worthiness.
Some of the things that affect your credit score include your payment history, your outstanding obligations, the length of
time you have had outstanding credit, the types of credit you use, and the number of inquiries that have been made
about your credit history in the recent past.
Credit scores used for mortgage loan decisions range from approximately 300 to 900. Generally, the higher your credit
score, the lower the risk that your payments won't be paid as agreed.
Using credit scores to evaluate your credit history allows us to quickly and objectively evaluate your credit history when
reviewing your loan application. However, there are many other factors when making a loan decision and we never
evaluate an application without looking at the total financial picture of a customer.
Will the inquiry about my credit affect my credit score?
An abundance of credit inquiries can sometimes affect your credit scores since it may indicate that your use of credit is
increasing. But don't limit your mortgage shopping for fear of the effect on your credit score.
Will I be charged any fees if I authorize my credit information to be accessed?
There is no charge to you for the credit information we'll access with your permission to evaluate your application online.
You will only be charged for a credit report if you decide to complete the application process after your loan is approved.
6. Qualifying Questions
I've co-signed a loan for another person. Should I include that debt here?
Generally, a co-signed debt is considered when determining your qualifications for a mortgage. If the co-signed debt
doesn't affect your ability to obtain a new mortgage we'll leave it at that. However, if it does make a difference, we can
ignore the monthly payment of the co-signed debt if you can provide verification that the other person responsible for
the debt has made the required payments, by obtaining copies of their cancelled checks for the last twelve months.
I have student loans that aren't in repayment yet. Should I show them as installment
debts?
Yes. Any student loan whether in deferment or in repayment should be included in the application. If you are not sure
exactly what the monthly payment will be at this time, enter an estimated amount. If other student loans are reflected
on your final credit report, even if they are not yet in repayment, we may need to ask you for additional verification of
your student loans.
How will a past bankruptcy or foreclosure affect my ability to obtain a new mortgage?
If you've had a bankruptcy or foreclosure in the past, it may affect your ability to get a new mortgage. Unless the
bankruptcy or foreclosure was caused by situations beyond your control, we will generally require that two to four years
have passed since the bankruptcy or foreclosure. It is also important that you've re-established an acceptable credit
history with new loans or credit cards.
What, exactly, is an installment debt?
An installment debt is a loan that you make payments on, such as an auto loan, a student loan or a debt consolidation
loan. Do not include payments on other living expenses, such as insurance costs or medical bill payments. We'll include any
installment debts that have more than 10 months remaining when determining your qualifications for this mortgage.
Can I make my monthly payments with an automated debit from my checking account?
Automated monthly payments are available. However, this procedure often takes place after your loan is closed and
funded. You can contact your loan servicing agent for procedures on automatic payments when you receive your first
payment notice from the lender.
7. Contact Jennifer Today
Join me on Twitter @JennLends
Click Here to Get Pre-Qualified
JFernandez@PulaskiBank.com
815-409-8781
