Why does a mortgage lender require so much paperwork from me?
Many changes that the housing industry underwent following the market crash of 2008 were put in place to protect consumers. One of these changes that became effective in 2014 was that a lender must make a reasonable determination if a borrower has a reasonable ability to repay the loan. A resource put out by the CFBP lists eight factors a lender should consider in determining a borrower’s ability to repay:
- Current assets that the consumer will rely on to repay the loan. For example, funds in personal bank accounts or other assets you may have.
- Current employment status and income.
- What the monthly payment will be for this loan.
- Monthly payment on any other loans that will be secured by the same property (example, a second mortgage).
- Monthly payments for property taxes, insurance, and other costs associated with the property like HOA fees.
- Outstanding debts, alimony, and/or child support obligations.
- Monthly debt to income ratios or residual income that has been calculated using the total of all the mortgage and non-mortgage obligations, as a ratio of gross monthly income.
- Credit history.
While providing all the documentation for your lender to determine all these factors may seem like quite the process the reason it is required is ultimately to protect you, the borrower. A professional lender doesn’t just want to get you qualified for a loan, they want to find you the best financing solution to fit you and your family’s unique needs. Working with a Veritas Loan Officer ensures that you will be given the best options for your situation.