Archive for May, 2020

What are the Best Mortgage Questions You’re Afraid to Ask?

Friday, May 15th, 2020

It doesn’t matter if you’re a first-time homebuyer or an experienced homebuyer. Homebuyers always have mortgage questions. And there is no mortgage question your mortgage lender hasn’t already heard. So whether those questions make you feel uncomfortable, naïve, or even stupid, ask them. Remember what your dad told you? “There is NO stupid question except for the one you didn’t ask.” Don’t be afraid to ask the awkward questions.

Mortgage questions
There are no stupid mortgage questions. And there are none your mortgage lender hasn’t already heard. So ask!

Find a Mortgage Lender Who has Your Best Interest in Mind

I’m all for transparency. But not wanting to ask uncomfortable mortgage questions of a complete stranger or a new acquaintance is quite understandable. I mean, who wants to “lay all their cards out on the table,” with someone they just met?

But you can’t shock a mortgage lender! Remember, they’ve heard it all before. And that means they have the answers to all those awkward mortgage questions, too.

Before we share a few examples of awkward mortgage questions, here is a key piece of advice. Only work with a loan mortgage lender who feels like a friend, someone who truly has your best interest in mind.

Yes, opening up about your personal life and finances is scary. We’re reluctant to reveal what we really care about because it makes us feel exposed and vulnerable. But strong financial relationships are built on trust, emotional trust. Since you need a strong relationship with your loan officer, open up to them with complete honesty. See Vanguard’s 2017 research.

So find and work only with a loan officer who is happy to answer all of your mortgage questions. No matter how trivial your mortgage questions may seem to you, a great loan officer will be glad you asked and will help you make financial decisions you’ll be confident with.

Best mortgage questions

Awkward Mortgage Questions Aren’t as Scary as You Think

1. “Will I lose my deposit, and can I still qualify for a home loan if I lose my job before or during the homebuying process?”

Above all, it’s important to be upfront about everything. If you fail to disclose that you lost your job before closing, you increase your risk of defaulting on your loan and foreclosure.

Verification of employment and income plays a huge part in getting prequalified and approved for a mortgage. Your mortgage lender looks at your debt-to-income ratio, your W2s for the past two years, your credit history, and more.

When someone loses their job before or during the homebuying process, the mortgage lender:

  • Recalculates earnings
  • Submits a new mortgage application
  • Provides new options

Your new financial situation will give you two options to consider.

a. Qualify for a smaller loan and buy a house in that price range

b. Still qualify for the same loan amount if you have more than one job or a low debt-to-income ratio

Homebuying Tip: Show sellers you’re a serious buyer. Get prequalified. Prequalifying before you start house shopping helps you find and get into a home faster.

2. “Can my ex be removed from my mortgage after I get divorced?”

Everything comes into play in divorce – mortgage payments, utility bills, home size, and family living arrangements.

There are two options to resolve this:

a. Sell your house

b. One spouse can buy out the other

The easiest option is selling your house and dividing the profits.

But if one of you wants to keep the house, one spouse must buy out the other and an agreement on the amount of the buyout must be determined. To determine the amount of the buyout, subtract the cost of selling from the home’s appraised value to equal the amount of equity leftover. Then split this amount between both parties. The spouse keeping the house will pay that amount to the other.

If a spouse chooses to use a mortgage refinance to pay the buyout amount agreed upon, the other partner is removed from the home’s title. Fannie Mae lets a partner borrow up to 95 percent of the home’s appraised value in a buyout.

3. “Does my husband/wife have to be on the loan or deed?”

Signing mortgage papers

Your odds of qualification based on credit score, employment history, and income are greatly improved when both of you are on the loan application. But in the United States, both spouses’ names are not required to apply for the loan. So, if your partner’s debt or credit score could hurt you, it might be wise to leave them off the loan or deed.

But know this, your non-borrowing spouse may still need to get a credit check during the mortgage process. If this is what you choose to do, you are solely responsible for the mortgage. Your name will be the sole name listed on the deed. And you will be solely responsible for the mortgage payments.

And if you decide to add your non-borrowing spouse’s name to the title, you can. Use a quitclaim deed.

You can also choose to add your partner’s name to your mortgage later on with a mortgage modification or by refinancing your mortgage. By refinancing your mortgage (taking out a new loan to replace your current mortgage), you will apply for a new loan again as co-borrowers.

If you choose to add your spouse to your mortgage later on, let your mortgage lender know that you want to do so. They’ll either decline or accept.

4. “What happens to my mortgage if I file for bankruptcy?”

A mortgage lender cannot change your loan terms or raise your rate if you file for bankruptcy.

If you file for Chapter 7 bankruptcy, you may be at risk of losing your home.

But if you file for Chapter 13 bankruptcy, you may be permitted to keep your house and continue paying your monthly mortgage.

Again, now is the time to talk with your mortgage lender. It is their job to find ways to work with you to either modify or reaffirm your loan. Then you can continue paying on and living in your home.

5. “I owe back child support. Does that matter?”

Back child support

Yes, it does. If back child support has gone to collection or judgment, it will factor negatively into your mortgage prequalification. Back child support shows up as a negative on your credit and makes you appear to be a greater risk to a lender. Do not skip talking to your mortgage lender about this.

Also, discuss how paying down your child support debt improves your chances of getting approved for a home loan. Show your mortgage lender how you’re managing your debt. Get a court-approved repayment plan or proof of payment and show it to them.

And if you are able to, pay the debt in full. This will ease the burden on your credit and make you eligible for an FHA or VA loan.

6. “I received a letter from my lender because I didn’t pay my property taxes. What do I do?”

If you don’t or can’t pay your property tax bill, your local tax office charges monthly interest. Penalties for overdue payment may also be charged. When this continues month after month, eventually a tax lien is placed on your property. Now you can’t sell your home until the tax bill is paid.

So what do you do if a tax notice or a letter from your lender shows up in your mailbox? Contact both a tax attorney and your mortgage lender ASAP. Even when you are making monthly mortgage payments, failure to pay property taxes is considered an “event of default.” And this could put you at risk for foreclosure.

There are relief options available to help you get back on track. Ask your mortgage lender about these:

  • Making late payments
  • Requesting a tax deferral
  • Establishing a payment plan
  • Taking out a property tax loan to pay down the debt in monthly installments

7. Why do you need to know where the money deposited in my account comes from?

Large deposits that are unrelated to your earnings require explanation during the mortgage approval process. To make sure the large deposit came from an acceptable source, the underwriter asks for verification. Confirmation of a large deposit is another way for an underwriter to find out if you’ve taken out a new loan or line of credit.

New loans or lines of credit potentially affect your debt-to-income ratio and the loan amount you can afford. And mortgage lenders will always tell you not to take out a new loan or line of credit when you’re trying to buy a new home.

8. “Do I have to stick with the real estate agent I started with?”

Mortgage questions

Poor communication, lack of experience, weak negotiating skills, personality clashes, and more happens. And buyers break up with their real estate agent after the contract’s been signed. Know this: you’re making the investment. It is well within your rights to switch agents while in escrow. But how can you keep this from being awkward?

  • Go to the brokerage and request another agent
  • Select another agent from another brokerage
  • Ask your mortgage lender for a Realtor Partner referral

Sometimes an early termination fee is required in your listing contract.

But document each time you feel the ball was dropped to provide “proof” of your dissatisfaction with your agent. Most agents appreciate an honest explanation from a client as to why their services were terminated. And that’s fair. You can’t improve upon something you did or the way you did it when you don’t know about it. Right?

And there’s always the possibility of problems or miscommunications getting resolved before a breakup happens. Nonetheless, it’s well within your rights to terminate representation without providing an explanation.

9. “Will my mortgage be sold to another company after I buy a house?”

Selling a loan to a servicing company is commonplace and a way many lenders stay in business. By selling loans to servicing companies, the funds a lender needs to take on new borrowers are freed up. Plus, this allows a lender to continue offering affordable loans with competitive rates.

A lender has the right to sell your loan to a servicing company at any time. But in order to do so, you as the borrower must be notified no less than 15 days prior to the transfer. When a servicing company takes over your mortgage, there’s not much you need to do at all. Your mortgage terms and payment (with the exception of adjustable-rate interest) remains the same. You just send your mortgage payment to a new company every month.

Since mortgages are either 15 or 30-year mortgages, yes, it’s likely yours will be sold to another company. Lenders aren’t always able to service every home loan they fund. If they were, outstanding balances could add up to billions of dollars in available funds. This is why borrowers’ loans are bundled and sold to investors, like Freddie Mac and Fannie Mae for example, based on risk level.

10. “What do I do if my mortgage company loses my payment?”

It’s happened. People pay their mortgage payments by check, and they get lost in the mail. If yours has been lost in the mail, or you think your mortgage company or loan servicer lost your payment, contact their customer service department immediately. Your lender will help you track down your payment and get it credited to your account.

When paying your mortgage payment by check, your bank can see if it has cleared, verify when it was sent and deposited, and where, for proof of payment. Contact them if your payment is truly lost. And if your bank cannot verify that this check was processed, place a stop payment on the check. Then, call your servicing company. Inform them of the situation and let them know you are sending another payment.

Paying online and making sure each mortgage payment goes through each month prevents miscommunication and keeps your loan from going into default.

11. “If I can’t make my mortgage payment, what should I do?”

If you can no longer afford your mortgage, contact your mortgage lender. They want you to keep your home as much as you do. They’ll ask about your financial difficulties, whether they are permanent or temporary, and why you can no longer make your payment. Then, they’ll assess your financial situation and offer solutions that can help you. Your lender will explore mortgage refinance, loan modification, a repayment plan, mortgage assistance programs, forbearance, or short-selling your home before you’re faced with foreclosure or bankruptcy.

The Consumer Financial Protection Bureau also recommends meeting with a free HUD-approved housing counselor to receive professional guidance that can help you to avoid foreclosure.

Get Answers to Your Mortgage Questions

And the answer to the question, “What are the best mortgage questions you’re afraid to ask,” is all of them!

Don’t hesitate to ask your mortgage questions. Find a great mortgage lender and get the help you need from them each step of the way.

If you want help finding a great mortgage lender, contact me, Charles D’Alessandroyour Brooklyn Real Estate Agent with Fillmore Real Estate. With 30 plus years of experience in the real estate industry, I can help.

Our office is completely shut down and committed to your safety during the COVID-19 health crisis in compliance with the State of New York public health policies. I can be reached by phone at (718) 253-9600 ext. 1901 or by email at [email protected].

Charles D'Alessandro

Charles D’Alessandro
Your Brooklyn Real Estate Agent
718-253-9600 ext. 1901