Tress Realty Group
  • Home
  • Investors
  • Homeowners
    • Selling >
      • Sale Prices
    • Buying >
      • Land
      • New Jersey 55+
  • News
  • About
  • Contact
  • Send Out Cards

4 Common Mortgage Killers & How to Survive Them

8/12/2015

0 Comments

 
Picture
Applying for a home loan these days requires detailed documentation. Expect to show everything from full tax returns, pay stubs, bank statements, to letters of explanation regarding your credit, debt, income and assets. However, that leaves quite a bit of room for challenges to pop up. Here are four common roadblocks you may encounter in the mortgage underwriting process, and how you can fix them.
1. Changes in Your IncomeLet’s say the underwriter at the loan company determines — based upon your pay stubs and tax returns — that your income is lower than what the loan originator said it was. An easy way to offset that is a written verification of employment (VOE), which specifies and breaks down your income. This is especially important if you’re an hourly wage earner with gyrating income – such as varying hours worked, bonuses, or overtime – that has not been consistent for most of the past two years.
Lenders like to see two years of more or less consistent income history, but there are ways to work with that. If you don’t have this, you’ll need a lender who can work with your ancillary income with less than 24 months. This is the type of thing that can make or break your loan, especially with income outside of a traditional fixed salary.
2. Your Debt Eats Up Too Much of Your IncomeA lender considers what your payment-to-income ratio will be with the new mortgage, so you can encounter a problem if your consumer debts, such as student loans, credit cards and auto loans, are just too large for the mortgage amount you’re applying for. If your debt-to-income ratio exceeds 45%, to still qualify, you’ll need to make a change in any of the following ways:
  • Reduce the payment on the mortgage
  • Reduce and/or remove the payments on the consumer loans
  • Re-evaluate the income
Here’s how your payment-to-income ratio — also called the debt-to-income ratio — is calculated: Take the minimum payments you have on all current consumer obligations, add those to your proposed total mortgage payment and divide the sum of those numbers into your monthly gross income.
3. Paying Off Your Debt… the ‘Wrong’ WayLet’s say you have credit card payments totaling $300 per month on a $10,000 balance spread out over two to three credit cards. You decide to pay off those credit cards to reduce your payment liabilities, thus lowering your payment-to-income ratio.
This can be very tricky if not done correctly, and can very easily skew the underwriter’s perception of what your liabilities truly will be by closing. When you pay off consumer debts to qualify for a mortgage, the account(s) must be closed as well. This can be problematic, as closing credit cards can have a negative impact on a healthy credit score. It is true you could simply re-open the credit cards after you close on the mortgage anyway, but lenders do not view it that way. They assume you’ll close the cards and not open them later on.
An alternative option involves getting an updated credit report that shows that the debts are paid off in full without any payments due. The key is to make absolutely sure each creditor whom you paid off in full specifically reports to each credit bureau a zero balance and a zero payment due.
Before you pull your credit reports, you can monitor for changes by looking at your free credit report summary on Credit.com, which updates every 30 days.
4. Negative Events On Your Credit ReportLet’s face it — mortgage loan originators are human, and they make mistakes just like everyone else. Let’s say your mortgage officer did not ask or was unaware of you having a previous short sale in the past four years. If it happened within the past four years, this can stop your conventional loan in its tracks, which could mean you’d have to move to an alternative loan program, such as FHA.
Lenders run each borrower through a comprehensive background screening through multiple fraud databases, which would identify any other property you were tied to in the past seven years. If any other unaccounted-for properties pop up, documentation will be required to either show the property is no longer yours, or it was sold, or the carrying cost of that property would be factored into your payment-to-income ratio.
If you are not sure about something financially related to your loan application, just be sure to ask your loan professional. Should any unforeseen roadblocks pop up in your mortgage loan process, call your loan officer right away to explain the situation and get a read on what type of documentation will be needed to satisfy the condition and/or the problem. An experienced loan professional — who has experience working with the type of mortgage you’re trying to obtain – can guide you through to a successful closing.
From: blog.credit.com
0 Comments



Leave a Reply.


    Picture

    Tress Realty

    Tress Realty Group compiles some of the best real estate news, tips, and information for buyers, sellers and investors.

    Get started with your home search at www.TressHomes.com.

    Archives

    April 2020
    January 2019
    October 2018
    July 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    June 2013

    Categories

    All
    Chatham
    East-brunswick
    Fair Haven
    Glen Ridge
    Hoboken
    Home Sales
    Maplewood
    Millburn
    Montclair
    Ridgewood
    South Orange
    Summit
    Tress Homes

    RSS Feed

Home

Website disclaimer and copyright

​
Use of the information and data contained within this site or these pages is at your sole risk. If you rely on the information on this site you are responsible for ensuring by independent verification its accuracy, currency or completeness.  It is provided “as is” without express or implied warranty. 

Some properties which appear on this web-site may no longer be available because they are under contract, have been sold or are no longer being offered for sale.  Images uses for navigation may be for properties in different towns, and are not intended to be considered anything other than representative of the types of houses that may be found in a particular municipality.  All data and/or search facilities on this site are for consumer's personal, non-commercial use and may not be used for any purpose other than to identify prospective properties that consumers may be interested in purchasing.

Tress Realty Group cannot guarantee the accuracy of the IDX/MLS data created by outside parties. Tress Realty Group further assumes no responsibility for any misleading content or incorrectly listed information due to such negligence. All ancillary information presented on this web-site is not guaranteed and should be independently verified by the users of this site. Tress Realty Group makes no warranty, either expressed or implied, as to the accuracy of the data contained within or obtained from this web-site.

Tress Realty Group accepts no liability for any interference with or damage to a user’s computer, software or data occurring in connection with or relating to this Site or its use or any website linked to this site.  Further, Tress Realty Group has provided Hypertext links to a number of sites as a service only. This should NOT be taken as implying any link between us and those various organizations or individuals.

Disclaimer: this website may be supported by ads and participation in affiliate programs. We may earn a commission when you click our links. The information included in this post is for informational purposes only and should not be taken as legal or financial advice.

Site copyrighted by Tress Realty Group LLC  © 2016-2022, all rights reserved.
  • Home
  • Investors
  • Homeowners
    • Selling >
      • Sale Prices
    • Buying >
      • Land
      • New Jersey 55+
  • News
  • About
  • Contact
  • Send Out Cards