Financing in Ann Arbor>Question Details

MBAgrad2013, Home Buyer in Ann Arbor, MI

Is it possible to get a pre-approval letter for an "Offer Letter Mortgage" in Ann Arbor, MI? Looking for recommendations for recent

Asked by MBAgrad2013, Ann Arbor, MI Sat Jan 19, 2013

graduates? I will be graduating business school in May with an MBA and will start working for a large consulting firm in Michigan at a base salary of $135K plus some bonuses. When I checked my credit last time to obtain student loans, it was around 790.
Anyway, my wife and I are interested in buying a house in Ann Arbor, and she works and currently makes $70K and has good credit as well, and we are looking to get a mortgage loan for around $150K. However, when I spoke with local banks, they did not seem to care about my job offer and would only consider my wife since she has paystubs to provide. I have paystubs from my summer internship and signing bonus I received from the company but the people I spoke with said that was irrelevant.
Does anyone have a financing recommendation for our situation? My wife could potentially get approved on her own but I would prefer if the loan had both of our names on it and that my good credit and imminent income would help secure favorable rates and loan terms.

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You can still be on the loan with your wife. However, only your wifes income will be used to qualify. Even though your credit score is higher than your wifes there is no benefit for you to be on the loan because the qualifying credit score comes the borrower with the lowest middle score. Even if you are not of the loan you will certainly be on title as Michigan is a dowry state or community property state which means what ever your spouse owns, you own.
1 vote Thank Flag Link Mon Feb 4, 2013
MBAgrad2013,

You said your wife could potentially get approved on her own, so did you ask what type of terms you'd get approved for if your income was considered vs. just your wife's? If there isn't a difference, then it sounds like you are just trying to find a lender based on the principal of using your income to qualify... so potentially you could be relegating yourself into using 1 particular lender rather than having multitudes to choose from. $70k/year of income to qualify for a $150k mortgage sounds pretty do-able, depends on what her other debt payments are though.

A job offer alone isn't sufficient to use to qualify in any situation - however a signed employment contract can be used in conjunction with Fannie Mae or FHA mortgages. Not all lenders will abide by it though, as it's pretty risky to use income from a job that hasn't begun yet in order to qualify, as proof you've received income is needed before the loan can be endorsed by FHA or delivered (i.e. sold) to Fannie Mae - and that is where most lenders have a problem because they don't want to hold a loan on their books for a period of time before it can be endorsed or delivered.

FHA guidelines are:
Projected income is acceptable for qualifying purposes for a borrower scheduled to start a new job within 60 days of loan closing if there is a guaranteed, non-revocable contract for employment.
The lender must verify that the borrower will have sufficient income or cash reserves to support the mortgage payment and any other obligations between loan closing and the start of employment.
The loan is not eligible for endorsement if the loan closes more than 60 days before the borrower starts the new job. To be eligible for endorsement, the lender must obtain from the borrower a pay stub or other acceptable evidence indicating that he/she has started the new job.
Examples: A teacher whose contract begins with the new school year, or a physician beginning his/her residency fall into this category.

Fannie Mae guidelines are:
Employment Offers or Contracts
If the borrower is scheduled to begin employment after the loan closes, the lender may, depending on its risk appetite, use the borrower’s offer or contract for future employment and income to underwrite and close the loan. If receipt of the income or employment information cannot be obtained prior to delivery to Fannie Mae, the loan is ineligible for delivery.
Verification of Employment Offers or Contracts
The lender must obtain the borrower’s offer or contract for future employment and anticipated income. The lender must determine whether to close the mortgage loan prior to the borrower beginning the new employment.
The borrower must begin employment before the lender delivers the loan to Fannie Mae. The lender must obtain a paystub from the borrower that includes sufficient information to support the income used to qualify the borrower prior to delivering the loan. The paystub must be retained in the mortgage loan file.

One lender we work with has guidelines which say:
For borrowers that wish to close prior to their first day of employment, the borrower must have an irrevocable employment contract with a professional position. The borrower must begin employment within 45 days of closing. All employment contracts will be considered on a case by case basis.

Another has guidelines which say:
Future Employment
• Maximum 80% LTV
• Purchase transactions only
• 1-Unit Primary Residence only
• Borrower’s employment contract or letter is obtained
• Borrower’s written acceptance of the offer is obtained
• Time frame between Note date and commencement of employment (employment gap) must not exceed 90 days
• Borrower must have adequate cash reserves after Note date to pay monthly PITI during employment gap PLUS 3 additional months reserves

However if the terms your wife can qualify for would be the same as what both of you would qualify for, to make it easier on yourself I'd recommend you just proceed to qualify with her income and not try to use yours.

Shane Milne | Lending in all 50 states | NMLS #81195
1 vote Thank Flag Link Wed Jan 23, 2013
Unfortunately you're not in a profession where your offer letter is pretty much a guarantee. Physicians and Attorney's usually are allowed to start before their first day with just an offer letter (in some cases, the first day) because those offers are usually a guarantee and this is the norm for those professions.

Until you can produce a month of pay stubs, you'll have a hard time closing with anyone (you could still take application before, you just can't close). If your wife can go solo on the loan, you could run with it now but of course you'll have to decide what's best your family.
Web Reference: http://RobWeber.com
1 vote Thank Flag Link Sat Jan 19, 2013
Hi, I think we might be able to assist you. please complete an application on our website, http://www.mtgcapital-mi.com

we should be able to get a pre-qualification done for you based upon what you have described, we will need a little documentation to confirm.
0 votes Thank Flag Link Tue Jan 22, 2013
Thank you for the vote on my comment earlier, it's nice to see accurate answers that directly answer the question get some respect instead of the fluff that often comes after it, I appreciate it!
Web Reference: http://RobWeber.com
0 votes Thank Flag Link Sun Jan 20, 2013
Of course you would rather be on the loan. I have a great lender can you email me privately. If you are going FHA they usually require 2 months pay stubs, but not so much for Conventional if they can obtain a VOE letter. (Verification of Employment)

Since you graduate in May, and start working right away, when are you looking to move in a house?

Sounds like you could have at least one pay stub.

Missy
0 votes Thank Flag Link Sat Jan 19, 2013
I have some recommended lenders on this website: http://www.LendAnnArbor.com but would recommend you call me first to discuss how do make your situation work, i.e.: your start date at work et.c

Have a good weekend and I look forward to hearing from you. http://www.TheRealtyTour.com
0 votes Thank Flag Link Sat Jan 19, 2013
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