In the mortgage lending process, as part of the standard mortgage application, lenders gather basic information about an applicant and ask questions which can seem personal. The questions are required as part of your application process and although you don’t have to answer every question, avoiding certain questions can slow down the application process.
The Equal Credit Opportunity Act (ECOA) prohibits discrimination in any aspect of a credit transaction, including, but not limited to race, religion, national of origin, sex, marital status and age (provided the applicant has the capacity to contract).
The number one reason a good lenders ask detailed questions is so that they can ensure your mortgage documents are prepared correctly.
Here are some questions, that although may seem a bit private, ultimately help move the whole process forward.
1. “What’s your marital status?”
Your marital status is an important factor in the application process because it outlines other elements that could impact mortgage underwriting including paying or receiving alimony, child support and anything that could affect your monthly income or debts. Lenders also want to know your marital status because different states have different rules about how married persons can take title to their homes.
If you were previously married but are divorced, you may also be asked for a copy of your divorce decree. There are currently nine “community property” states, including Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In “community property” states, debts of both spouses must be considered when applying for a government supported mortgage, even if the application is in the name of only one spouse.
2. “What is your age?”
The number one reason why lenders need to know what your age is so that they can verify that you are old enough to enter into a legally binding contract without a guardian. Lenders also ask your age because it is required when pulling credit and verifying your credit score is a vital element in getting you approved for a loan.
If you are not 18 years old at the time of your loan application it could void your mortgage.
3. “Are you currently involved in a lawsuit?”
Lenders care about lawsuits because they carry the potential for monetary loss, and monetary loss can lead to mortgage default. The last section of your mortgage application are a series of questions known as “declarations” including a question about whether you are currently involved (plaintiff or defendant) in a lawsuit. By answering “yes” to the lawsuit application question, a request is triggered for additional information but often doesn’t result in your loan being turned down until other elements are processed.
Additional Document Requests Include:
- Your status (plaintiff or defendant)
- Amount of your insurance coverage
- Amount of money involved
4. “What is your ethnicity?”
Another section of the “declaration” portion of your mortgage application involves ethnicity. As a borrower, you are not required to answer this question and your mortgage approval will not be affected if you choose to not answer.
The government does a great job tracking whether mortgage applications for any given ethnicity are being processed at an above-average rate. When borrowers provide ethnic background information it allows the government to do a better job uncovering patterns of discrimination.
5. “How many children do you have?”
Not only will lenders ask you if you have children but they will also ask for their ages. Household size and residual income help determine eligibility for the different loan programs that you may qualify for. Although this question may feel intrusive, the purpose is to actually get you qualified for the loan that works best for your family size.
As always, we recommend understanding why you are being asked questions before having you provide answers. If you ever feel you are being asked a question you aren’t comfortable answering, make sure to follow up regarding why you are being asked and confirm you feel comfortable with the answer you are provided before giving more personal information. If you are interested in speaking about obtaining a mortgage or refinancing your home I am always here to answer all your questions!
Kathleen Beck, Mortgage Lender
CA BRE# 01058848 | NMLS#243181
West Coast Mortgage Group