Questions / Advice of the Week:
· Renters should always pay by check: 1) To document by cancelled checks in case of dispute with the landlord in payment 2) To prove by cancelled checks that the rent has been paid on time (receipts don’t work because anyone can write a book of receipts and often a verification of rent completed by an individual is not acceptable) 3) Money order receipts are acceptable but I have rarely seen someone have all 12 of the last 12 months receipts as proof of history 4) Make sure that the landlord cashes the check right away because lenders go by the date the check cleared the bank, not the date it was written.
· Do not pay cash for an Earnest Money Deposit because it will not be used as a credit at closing since we probably can’t verify that the cash actually came from the buyer’s account. Pay by check and then once the check clears the bank, we can be given a copy of the cancelled check.
· “Can I purchase a home and add to the loan to consolidate bills at the same time so I can afford the house?” The answer is no on this. A purchase money loan is either just for buying a home or for buying a home and financing renovations to the home
· “Can I use unemployment income or compensation to qualify for a mortgage loan?” A very little known fact, even among mortgage professionals, is that you can count unemployment income in certain circumstances for a mortgage loan. If it is customary for the job and expected to continue for the next 3 years, unemployment compensation can be counted as income and either averaged over the last 2 years or if declining, use the most recent lower year. Employees that work shut downs, seasonal employees that work at golf / ski resorts, and journeyman are all examples of types of jobs where unemployment income is paid at periods throughout the year. It is common for these employees to be laid off at certain times for weeks at a time and then brought back to work. If there is a pattern like this and it is expected to continue, you can use the unemployment compensation as income for mortgage qualifying. An experienced loan officer would see that this income could be used to help qualify a borrower for a mortgage.
· Can a buyer close on a house prior to having the first paystub? For many options, a signed offer and acceptance with no remaining contingencies or conditions are allowed for calculating income and receiving a loan approval. Depending on the product and the strength of the borrower, we can close a purchase prior to receiving the first paystub on a salaried job. We would need a copy of the first paystub when received after closing. This is a case by case but we have used this fairly often to help relocating buyers in their transition
· “Can I have a co-signor that will not live in the house on my loan to help me qualify?” Yes, under certain circumstances. FHA and Freddie Mac (conventional) loans will allow a “non-occupying” co-borrower on the loan if it is a family member. The primary borrower does need to meet minimum credit guidelines. The co-borrower cannot make up for bad credit of the primary borrower. Basically the extra borrower can help in the case of additional income to qualify for the mortgage. The co-borrower needs to bring good credit and low debts in relation to their income to the loan to be helpful in qualifying. The co-borrower needs to remember that this debt will show on his/her credit report also which would affect credit in a negative way if ever late or foreclosed