A lot of mortgage applicants get anxious over the potential denial of their loan applications. After all, the devil is in the details and a simple oversight on your part can spell trouble for your loan approval. That’s why it pays to know ahead so you can make the adequate preparations when you initiate your mortgage application process.
So what are the things that lenders look for and what are the aspects they don’t necessarily take into consideration? Since the former has been extensively discussed in this blog, this article addresses the concern of the latter so you can reconcile your myths with the facts.
There’s no reason lenders should discriminate you for the sole reason of your birthdate, as long as you’re of the legal age (18 or 21), and unless it directly concerns an important requisite of the underwriting process such as in the case of reverse mortgages (only available to seniors 62 years and older). Lenders may also ask you some questions about the correlation of your age to your income especially for retiree applicants. Otherwise, age and date of birth are merely pieces of data that must be pulled for basic form-filling or identification purposes.
If you are on the receiving end of a spousal or child support, you may choose not to disclose that information. However, if you want this money to count as income in your mortgage application, you have to provide proof of your reliable receipt of said support. Furthermore, you must be able to demonstrate that this financing support will continue for at least the next three years. And, whether you are the one paying or receiving, your lender is in the position of asking you for your divorce decree to verify payment terms. If you are the parent giving out the support, you will have to disclose your monthly payments as monthly debts. Overall, divorce is insubstantial ground for loan denial.
Even if a borrower has a clear case of disability be it of mental or physical in nature, he or she is not exempt from being treated fairly in underwriting. This includes those individuals who receive Social Security Disability Income or SSDI as income. The borrower can choose to include his or her SSDI as income in his or her mortgage application as long as it is proven that the applicant will continue to receive such payment for at least three years.
Gender, marital status
Gender has been a sensitive topic, especially lately with the rise of various gender movements. The mortgage industry is thus wise to stay out of all the chaos and stick to the standard non-discriminatory policy regarding genders.
On the other hand, the rule might be a bit difficult for marital status. In some US states more commonly called community property states, if you take a mortgage while you are married, both spouses should have a knowledge or permission to take the debt. For FHA loans, it is obligated by law to check both spouses’ credit. This remains the rule even if only one spouse applies for the loan.
If you are a foreign national, you can buy a property with both conventional and government-insured mortgages, given you have sufficient paperwork. Employment Authorization Document issued by the U.S. Citizenship and Immigration Services is required but if it is set to expire within a year and has never been renewed in the past, the lenders may ask you to forward additional information.
Race, color, or creed
You shall never be discriminated by your ethnicity, complexion, or nation of origin. If the lender asks these information in their forms, you are not obligated to fill it out, although Home Mortgage Disclosure Act requires your lenders to fill this information out for the ironic purpose of detecting discrimination itself. If it is the lender who supplies this information on the form, he or she will have to disclose how it was established.
You shall not, under any circumstances, be discriminated or denied a loan because of your religious background or affiliation.
Number of children
No lender can deny your loan application on the sole basis of having too many (or too few) children. This is clearly established by the Fair Housing Act, which even discourages lenders from probing into your family planning. Other mortgage products however, such as VA and FHA loans, may touch parts of this subject, such as the case of income limits that may directly concern family size.
Elements of consideration may vary from lender to lender. It is important to note however, that just because an information does not include an info slot in the mortgage application does not mean your lender might not probe into it. There may be instances that the lender will ask you about your health status or your health insurance, or other cost-related concerns such as your utility bills. It is important that you pay attention to both what is required and what is implied. In the case of the above list, you need not to worry. Once you know your rights, you can now proceed with confidence.