02-11-2012 03:06 PM
I hope someone can give me guidance. I went chapter 7 just short of 4 years ago. My tu score is 698 at present. I only chaptered 7 my credit card debt. No mortgage or auto loans involved nor were any paid late. My son is applying for a mortgage pre approval and has a median score of 765. Problem is he only makes paid a year base salary and they will not count his mandatory overtime pay ( additional 8k a year minimum). He also has school loans since he just graduated a year ago. I have always paid the school loans since day one, but they are counting this against him and further reducing his purchasing ability. I have a few car loans and a small balance remaining on my mortgage. I have 26 years on my job and make over 90k. My son knows nothing of my BK, nor do I want him to. MY additional income, I believe would help him but I am very unsure what I should do. Any guidance would be appreciated. Thank you!
02-11-2012 04:36 PM
I'm not a mortgage guru by any means so bumping for others.
From the little I do know, if you become a co-borrower (I don't think there's such thing as a co-signer in mortgage-speak), I'd think the lender would also factor your income, credit history, and even your DTI like your mortgage payment, car notes, etc., into the equation. I do not know if lenders would treat this differently if going FHA/USDA/VA because you have a mortgage already. And of course, if he is late, then you are late too. If he has a foreclosure, then you do too. Something to keep in mind. Make sure you are comfortable in making his payment too if there were ever a life event like a job loss. Not saying that would happen, but it's good to be prepared while considering the process.
On the BK, he'd see it. Your/his lender will provide a tri-merge report and that would show the BK. We went through the process last year and even had to sign the tri-merge as part of the loan process.
Did they say why they won't include the OT? Is the income showing on his taxes? His 1040s would be revealing enough, I'd think. If a W-2er, then it should also show on his paystubs and W-2.
02-11-2012 05:19 PM
Generally OT is not included if you can not show a consistent history for 2 yrs of OT. The OP says his son has a new job for only one year.
What actually is your sons Debt to Income? Both front end and back end ratios would be helpful.
As parents we frequently want to help our adult children. Sometimes, especially when it comes to a mortgage, the best form of help we can provide is guidence on what our adult children need to do to qualify on their own rather than become a co-borrower on the loan.
02-11-2012 05:32 PM
Thank you for the response. They say that my son has to show 2 years consistent OT in order for it to be included. Since he only graduated a year ago from university, that is not possible.His w2 shows an income of 31k with the ot and only working there for 10 months. He worked a part time job for 4 years while in school. My income and dti are in well within an acceptable ratio, but I have the almost 4 year old bk. Plus, I am very embarassed as it is about it, without my son finding out about it. Thanks again!
02-11-2012 09:57 PM
02-11-2012 10:19 PM
You could consider maxing out the IRS "gift" directly to him to assist with down payment, if you have the cash available. I believe it's 13k with no tax penalty to him (consult with an accountant!)
The extra LTV ratio should help with the loan, and you don't have to get in the middle in case he hiccups.
02-12-2012 04:26 AM - edited 02-12-2012 04:27 AM