Rocket Mortgage is an online home loan provider that provides different mortgage products which include home equity loans. Rocket Mortgage home equity loan allows the homeowners to borrow money against the equity of their house for major expenses, to pay off the debts, renovate the house, and for other purposes. But when you are applying for one of the Rocket Mortgage home equity loans, does the company check your income?
What is a Home Equity Loan? Home equity loan can be described as a second mortgage that enables you to take a cash out on your home equity. Home equity is the difference between the present-day value of your home and the remaining balance you have on your mortgage. Thus if you own a house worth three hundred thousand dollars but you still have a balance of two hundred thousand dollars in your mortgage then you have an equity of a hundred thousand dollars. In essence, a home equity loan involves using the home’s equity to guarantee another loan.
Borrowers receive home equity loans with fixed interest rates, fixed monthly installments, and a one-time payout. You can use the payout for nearly any reason, which includes home improvement projects, tuition and education fees, debt consolidation, financial emergencies, and much more. The good thing is that as long as you are on the right side of the law by paying your installments on time, the lender cannot come and take back the loan or alter the conditions.
Do Rocket Mortgage Assess Income for Home Equity Loans? Yes, Rocket Mortgage does verify the income, assets, and other information when applying for a home equity loan. This assists them in establishing how capable you are in repaying the loan.
Here is some of the information Rocket Mortgage will verify when you apply for a home equity loan:
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Employment and Income: Rocket Mortgage needs the proof of the income sources and the monthly salary and this may include; pay stubs for the past few months, W-2s, bank statements and/or tax returns. This is because they would like to be guaranteed steady employment and thus a steady income.
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Assets and Reserves: You will need documentation of your available checking/savings or retirement accounts, as well as reserves equal to a few months of expected mortgage payments. This goes a long way in showing that you are capable of meeting your payment obligations if for any reason your income stream is interrupted.
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Credit History: Rocket Mortgage will consider the credit report and score you obtain when applying for a loan. It is good to have credit as it increases the chances of being approved and also increases the chances of getting better loan terms. Minimum credit score requirements depend on the type of loan you are applying for.
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Collateral Value: There are restrictions on the amount that can be borrowed using home equity loans or lines of credit, which is usually a percentage of the home’s value as of today. Rocket may need an appraisal.
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Existing Mortgages: Mortgage information for your home is also required in order to find out how much equity is available. Rocket Mortgage may also consider the payment history.
Preparing Documentation As it has been pointed out that Rocket Mortgage does demand income proof for home equity loans, one has to ensure they are ready with all their information once they apply. This will ensure the process goes smoothly. Suggested documents to get ready include:Suggested documents to get ready include:
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Income tax returns for the most recent one or two tax years
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Most recent W-2, and pay stubs for one to two months.
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Check records and at least one to two months’ bank statements.
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Statements of retirement accounts with vested balance
- Reporting of any other source of income other than wages or salary
Having all components of your financial profile available means that the process of applying will be much smoother. Rocket Mortgage also has an online service that allows you to upload documents to the firm electronically and securely.
Seeking Loan Pre-Approval It is advisable to complete Rocket Mortgage’s pre-approval step for the home equity loan before applying for it officially. Pre-approval offers a preliminary approval and informs you the approximate amount of money that you may be approved to borrow depending on characteristics such as equity, income verification, credit score, and debt-to-income ratio.
Pre-approval gets you acquainted with Rocket Mortgage’s loan officers and allows you a chance to compile any outstanding materials at an early stage. If you have a pre-approval letter, it also demonstrates to the sellers that you are a credible buyer if you proceed to use the loan money to buy a home.
The pre-approval application will ask you to provide information about your income, employment, estimations of your home value, and your debts and assets. This enables Rocket Mortgage to compare your details with the program requirements before completing a full application.
Weighing the Benefits Rocket Mortgage demanding proof of income and other assets for their home equity loan program is actually beneficial to the borrower in the long run. Ensuring that you are capable of handling the payments that come with loans reduces the possibility of default for both the borrower and the lender. This is more likely to be the case if review of all aspects of your financial status is possible in the decision making process.
Ultimately, Rocket Mortgage aims to facilitate lending while keeping in mind the borrower’s capacity to handle new monthly charges and interest expenses that come with cashing in on their home equity through cash-out refi or home equity loans. This is where the verification of the income sources comes in handy in establishing this balance. Contact one of Rocket Mortgage’s home loan specialists to discuss if the home equity products might be suitable for your situation and how to build the best application.
