As a prospective borrower when you visit a lender, you are expected to answer certain queries. Mortgage applicants are expected to prove their income, verify their employment, show tax returns, etc. However, there are certain lenders, who demand answers for questions which the borrowers are unable to answer or don’t want to answer.
Here is a check-list of queries which your lender can ask you and you’re bound to answer them:
Income: The lender has the right to inquire about your income as it will decide whether or not you will be able to get a loan and pay it off. The lender will ask you to show the last 2 pay-stubs. He will also want to see your tax returns if you’re self employed.
Job history: The lender will definitely ask you about your job history. He will want you to show around 2 years of job history.
Credit history: The lenders have the right to look at your overall credit history in order to know how you have managed your finances. The lender will also look at it to check your credit inquiries and other credit problems in order to know whether or not you have taken out other loans or credit cards recently.
Assets: Lenders will want to verify your assets in order to make sure that you’re not borrowing money from others for down payment. If you’re receiving money as gift, then you should get a gift letter for the same.
Debts: The lender has the right to inquire about your debts as it will help him calculate your debt to income ratio. You should review your debts before applying for a loan and dispute those debts which shouldn’t remain on your credit report.
Here is a list of some of the unexpected questions which are legal for the lender to ask:
Lawsuits: Lenders always ask the borrowers if they are involved in a lawsuit because of the potential cost and the possibility of a judgment that will go against the borrower.
Divorce: It has been found that in case of a divorce, one spouse can be held responsible for the other spouse’s debts. As a result, the lenders are concerned about the financial details if the borrower is going through a divorce. Moreover, if you’re receiving child support or alimony, then the lender needs proof that the income will continue.
Ethnicity: The lender can ask the borrower about his/her ethnicity. This is to avoid any discrimination based on ethnic background and is allowed by the Department of Housing and Urban Development (HUD). Then, HUD can review lender records to make sure they aren't routinely turning down minorities or charging them higher fees.
Here is a check-list of questions which the lender cannot ask the borrowers:
Family planning: The lenders cannot ask a borrower about family planning. However, one may be asked about how many dependents they have and about the marital status. This will help the lenders decide whether you qualify for a first-time homebuyer and for special loan programs that have income limitations.
Physical condition and health issues: Under the Fair Housing Act and the Americans with Disabilities Act, lenders are not allowed to discriminate borrowers who are ill or disabled. Thus, the lenders are not allowed to ask questions related to your physical condition.
If you feel that you are being asked inappropriate questions, you should give a second though about your lender.