Understanding Your Online Mortgage Application Form
I’ve been through the mortgage approval process several times now, and each time my mind is boggled at the amount and complexity of the paperwork one has to fill out before the bank will turn over the funds so the seller will turn over the keys. In particular I think there are a few aspects of the typical online mortgage loan application that all but guarantee you won’t be qualified for the loan, so I wanted to take some time to make them a little more clear to you. In now particular order, here are some of the terms on your application that may make it a poor use of your time to fill out the form at all:
On page 3 of the application you have the following questions:
a. Are there any outstanding judgments against you?
Judgments, of course, mean that you’ve been party to some kind of litigation and lost. Or, that you’ve been found liable in some kind of accident (or some kind of non-accident if you know what I mean) where the courts have ordered you to pay a certain amount of money as a penalty for something you did. Having judgments on its own might not knock you out of the running for a home loan, but it’s definitely not going to make the process easier.
b. Have you been declared bankrupt within the last 7 years?
I suppose if this one applies to you then you already know that you’re going to have an uphill battle when applying for a loan. Again, if you’ve had a bankruptcy within the last seven years it’s not necessarily impossible to get approved, but it’s certainly a big black smudge on your mortgage loan application. Most people who’ve filed bankruptcy will already have researched their options when it comes to getting a new home loan or refinance after a bankruptcy.
c. Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?
Boy, that’s being blunt isn’t it? What they’re asking here is “have you been a good boy or girl with your previous home loans?” And notice that they don’t just ask if you’ve had a foreclosure. They also want to know if you’ve given title or deed in lieu of foreclosure, which is to say they want to know if you all but got foreclosed on and managed to dodge it at the last second. If you have to answer yes to this question, qualifying for a decent loan is going to be tough.
d. Are you a party to a lawsuit?
Why do they care? Well, it’s a funny about lawsuits…when one person wins and the other loses, money is going to change hands. And if the loser doesn’t have the money, they’re looking at liquidating assets and/or filing for bankruptcy. So, with this part of the online mortgage application they’re trying to say “Okay, under your current circumstances you qualify for this loan. But if you’re being sued and you lose – which means you have to file bankruptcy within the next few months – we want no part of you.” So if you’re in the middle of a lawsuit the typical mortgage underwriter is going to turn tail and run from you. Sorry.
So those are some of the ‘red flag’ questions you’ll have to answer as part of your mortgage application online process. If you have to answer yes to any of them, work with your loan officer to see how you might be able to still get your loan.