Question 1

What does a lender review?

Accepted Answer

A lender reviews your income and how it is documented, your employment history, your credit history, your monthly debts, the assets available for down payment and closing, and the property itself. Loan program rules are then applied to that full picture.

Question 2

What is the difference between prequalification and pre-approval?

Accepted Answer

A prequalification is an early estimate based on information you provide. A pre-approval follows an actual review of documentation such as income, credit, and assets, which is why sellers generally treat it more seriously.

Question 3

Do I need 20% down?

Accepted Answer

No. Several programs allow qualified buyers to put less down. A larger down payment can reduce your payment and may remove mortgage insurance, but it also uses cash you might want to keep. Compare both outcomes together.

Question 4

What is PMI?

Accepted Answer

Private mortgage insurance protects the lender on a conventional loan when the down payment or equity is below program thresholds. It is a cost, but it can also let a qualified buyer purchase sooner while keeping more cash available.

Question 5

Can I qualify with less-than-perfect credit?

Accepted Answer

Possibly. Credit is one factor among several, and some programs allow more flexibility than others. The practical step is to review your actual profile rather than assume the answer in either direction.

Question 6

How does variable income get reviewed?

Accepted Answer

Bonus, overtime, per diem, commission, and self-employment income are typically reviewed for history, consistency, and documentation. Some income types require a longer track record than others, and how they are calculated varies by program.

Question 7

What happens after my offer is accepted?

Accepted Answer

Your loan moves into processing. An appraisal is ordered, remaining documentation is collected, underwriting reviews the file, and you receive a Closing Disclosure before signing. Expect a few document requests along the way.

Question 8

What is an appraisal?

Accepted Answer

An appraisal is an independent opinion of the property's value prepared for the lender. It helps confirm that the loan amount is supported by the property and can also flag certain condition issues, depending on the program.

Question 9

What are closing costs and prepaid items?

Accepted Answer

Closing costs are the fees required to originate and close the loan, including lender, title, and recording charges. Prepaid items are amounts collected in advance, such as interest, homeowners insurance, and property taxes.

Question 10

When should I consider refinancing?

Accepted Answer

When you have a specific goal — a lower payment, a different term, removing an adjustable feature, or accessing eligible equity — and the full cost of the new loan is justified by that goal over the time you expect to keep it.

Question 11

How do VA eligibility and entitlement differ?

Accepted Answer

Eligibility means you qualify to use the VA program based on service requirements. Entitlement is the amount of guaranty available to you, which can be affected by prior VA loans. Both are documented and reviewed.

Question 12

Why should I avoid changing jobs or opening credit before closing?

Accepted Answer

Both change the file that was approved. New debt affects your ratios and a job change affects income documentation, and lenders often re-verify late in the process. Neither is prohibited — they just need to be discussed first.

Mortgage Questions, Answered Plainly

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