Eight Scenarios that Can Affect Mortgage Qualification

Dated: 07/07/2012

Views: 4504

Eight ways that can affect your mortgage qualification:

-        Changing Jobs Before Closing.  Underwriting approves the application based on documented income covering two years or longer from one source.  Revising the job history will be numbered in days (even if it’s the same type of position) rather than years which can cause a rejection of the loan.

-        Rental Income During Part of Year Can’t Help To Qualify For Another Loan.  Anticipated rental income cannot be counted as qualifying income unless it is documented in the owner’s tax return for a minimum of two years.

-        Using One Spousal’s Income with The Other Spouse’s Credit.   Good credit without the means to pay is of little value to lenders and good income without the willingness to pay is not much better.  Lenders require both capacity to pay and willingness to pay in the same person.

-        Restrictive Requirements Make Pre-approvals More Valuable.  The main purpose of pre-approvals is to establish the bona fides of potential homebuyers to home sellers and their agents, who don’t want to waste time dealing with wannabe buyers who can’t qualify for a mortgage.  With an increasing number of potential homebuyers unable to qualify, the value of reliable pre-approvals has increased.

-        Nonpermanent Resident Alien Can Qualify For A Mortgage.  Nonpermanent resident aliens can qualify but the terms can be a little stiffer because of the risk that the individual might be obliged to lease the country.  Lenders can require a larger down payment and/or higher interest rate. By contrast, a permanent resident aliens don’t suffer these penalties.

-        Bigger Appraised Value over Purchase Price Used To Minimum Down Payment Requirements.  The down payment requirement is based on the lower of purchase price and appraised value. Appraised value is ignored.

-        Sizeable Student Debt May/May Not Prevent Mortgage Qualifications. It may if you must begin repaying the debt within the first year of the mortgage and if the amount is large relative to income. If the payments are deferred more than a year, it is a judgement call by the underwriter who will consider the size of the student debt, your credit and perhaps other factors.

-        Divorced Spousal Still Liable for Existing Mortgage Can Affect Getting Another Mortgage.  If the income is large enough to afford the payment on two mortgages then no problem.  However, if you can only afford one mortgage, the Ex must induce the other to refinance the mortgage in his/her name only.

I hope this helps you in your mortgage qualification search.

Talk to me about selling or buying a home today, Jennifer Core with Exit Realty Central.  Contact me at Jennifer@ExitDayton.com

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David Cooper

Real Estate Broker....

1 comments in this topic

  • Posted by bella hart
    07/12/2012
    Jenn this is great information since lots of people don't know what could affect their future mortgage! Appreciate all the details you mention in your blog! Thanks so much

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