I know it was easier 5-7 years ago to obtain a mortgage but given the situation below, how much more is needed?

Asked by Brian Schemenski, Washington Township, NJ Thu Jan 9, 2014

For instance a good friends situation explained: 720 FICA, 50k cash to put down, 20k a year in not earned income but is counted as earned, debt ratio within limits, Home price within means of 140k. Aside from the 20k guaranteed income there is very little shown as far as income from being self employed. In actuality it is actually a hobby. Even though the company has had a substantially large amount of sales and you can see there was a large amount of deductions. Are there any mortgage companies out there that have less requirements about income or can see the amount of cash that is readily available as far as the flow is concerned in and out of the personal and business accounts ie: checking. You would think a mortgage company would be willing for someone whom has 50k to put down whilst others hardly even have the 3%.Also the future mortgage payment would be less or equal too the person's rent for the last 5 years in this situation presented. Any help would be greatly appreciated.

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5
Jeanne Feeni…, Agent, Basking Ridge, NJ
Fri Jan 10, 2014
Agreed, talk to a reputeable mortgage rep. The rules have again changed as of Jan 1 and are more restrictive still.

Best,
Jeanne Feenick
Unwavering Commitment to Serivce, Unsurpassed Results
0 votes
Stan Tobiason, Agent, Twin Falls, ID
Fri Jan 10, 2014
There are so many new rules out there, it would be best to talk with a few lenders. There is always a hard money lone, but that will have a higher interest rate than your standard loans..
0 votes
Plus 35% down and 12 months liquid reserve in the amount of the mortgage payments plus closing costs. The rate given was 5.14 %. They have a place to live so I said wait. In actuality considering past rates, is 5.14 % considered getting raked over the coals? Not apples to apples per se but my student loans are at 5% and schools are begging me to sign up again all while I owe 20k + . strange how mortgage lenders gain property on a default and its harder to get a note today, where as school's are trying everything to get you to take classes and there is no monetary gain for them should a student default.
Flag Tue Jan 21, 2014
Joe Montenig…, Agent, Sewell, NJ
Fri Jan 10, 2014
Hi Brian,
Generally speaking, if you have $20k of verifiable income, that what the lender will use to qualify you. Your suggestion that a large down payment or a business/hobby with cash flow but no profit will somehow improve the borrowers ability to repay the loan, is simply not correct, and that's why lenders won't use it for qualifying for the loan.

I think your friend should shop a few different lenders and present thier application and documents to each one....yes it's a lot of work. In the end, they may need to buy something a little cheaper based on what they qualify for. I understand your frustration, and maybe your just venting... If so, let me vent with you, because I tell buyers over and over and over not to look at any houses until aftr they are PREQUALIFIED for a mortgage. Your friend could have avoided a lot of frustration and wasted time for everyone involved.

Good luck to you and your friend,
Joe
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0 votes
Thanks. I wrote the question for him as he is not computer savvy in the least. He didn't waste the Realtors time as they told him exactly what you said pertaining to pre-qual. As far as shopping the loan. Lenders are not too enthused on lending smaller amounts when the buyer has a 20 + percentage down payment. He is finding that they are not to willing to offer a loan on under 100k. Basically sitting in the middle, which I told him that it means wait and as the others have said/asked about the schedule c. Provided he has the same or more income this and next year to take less deductions in order to get out of the grey area and perhaps pre-qual for a mortgage that the lender is more comfortable with (making an amount in order for them to deem it worthy) and less risk on paper to them. I wasn't sure myself if there are mortgage lenders out there who do the lesser amounts these days in the 50k to 85k. Thanks to all who replied.
Flag Tue Jan 21, 2014
Julie Charti…, Agent, Feeding Hills, MA
Fri Jan 10, 2014
Speak to a lender. Does the friend have tax records, schedule C showing the income? Self employed people can get mortgages as long as there is a steady history of the income.
0 votes
Julie Charti…, Agent, Feeding Hills, MA
Fri Jan 10, 2014
Speak to a lender. Does the friend have tax records, schedule C showing the income? Self employed people can get mortgages as long as there is a steady history of the income.
0 votes
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