Do I qualify for a mortgage? Info that is needed.[ Edited ]
11-15-2008 02:18 PM - edited 05-13-2011 09:01 AM
Even though we normally can answer your questions with the information that most people include in the original post, I just wanted to provide a list of information that the people who answer questions normally will need to give you complete, accurate advice on your chances of being able to qualify for a mortgage. Remember, the more information that you share, the more information that can be shared back with you.
- Credit. What are your credit scores and if you have any, what negatives (collections, charge-offs, late payments, BK's, judgments, tax liens, back owed child support, etc.) are on are credit and if they are owing or not. When were the negatives, this is important, month/year is preferred, such as 3/07. For BK's the Ch, filing & discharge date. Even if credit isn't less than perfect, if you only have credit for a short period of time (<24 months), authorized user accounts (which aren't considered by underwriting), accounts from your father with the same exact name because you are a Jr., etc. that is important information to know too.
- Income. Gross income is what is important when qualifying, not net income. For self-employed/1099'd people it's your gross income minus expenses/write-offs, adding back in depreciation/depletion. I know this is pretty sensitive for some people to list their income, but remember this board is anonymous (for those of you who want to remain that way). If you don't want to list your income, and just want to receive advice without addressing that part of qualifying (which is very major), just say you have enough income, no one will pass judgment, but realize the advice given might not be able to be complete.
- Source of income. Where is the income coming from? Employment, pension, social security, disability, foster care, VA benefits, rental income, lottery income, etc. If it's from employment, is it salary, hourly, overtime, bonus, commission, etc.
- Monthly debt payments. This goes hand in hand with income and the new mortgage payment to determine your debt to income (DTI) ratio. Only items on credit is the general rule, but also items such as alimony, child support, union dues and some other work related expenses are included too. Only the minimum required payment amount is what underwriters are concerned with. Items such as utilities, cell phone, insurance, etc. are not included in the DTI. If you have a question if something is included just ask.
- Employment (for those who are employed). What type of employment such as self-employed, S-corp, W-2'd, 1099'd, part-time, full time, 2nd job, etc. How long have you been on the job & how long have you been in the industry. A 2 year employment history is what most loan programs require. For those who have been self-employed less than 2 years, what did you do before your venture? For those of you who have less than 2 years employment history, did you graduate from a higher education school before you started working?
- Assets/Reserves. This is to determine how much you could potentially have as a down payment and also as reserves to help qualify (for example if your debt to income ratio is high this could help qualify you anyway). Savings, checking, 401k, IRA, stocks, bonds, CD's, mutual funds, money market accounts, gift, etc. all can qualify. If it is a pension or retirement account that does not permit you to withdraw or take a loan against (other than for hardship), and is only able to be used after you quit or retire, then it cannot be used as reserves.
- Location. What state & county. City or zip if you want but usually that is not needed. This is to determine FHA loan limits, what special programs might be available for you, how much property taxes & homeowners insurance will likely be, amongst other items.
- Property. Is it a single family house, condo, townhome, 2-4 units, 5+ units, manufactured home, a co-op, condotel, the penthouse of a 45 story apartment building, suburban, rural, a lot of acres, a working farm, a gas station, etc. Also the condition of the property is helpful, as lenders have certain minimum requirements properties must meet (working utilities, etc.).
- Value. For a purchase transaction, what is the home price range you are looking in, narrowed it down to, or are under contract for... and for a refinance transaction what is the appraised value of the home and when did you purchase your home.
- Occupancy. Primary residence, vacation/2nd home, non-owner/rental property.
- Transaction Type. Is it a purchase, refinance just for better terms, refinance to take cash out, looking for a 2nd mortgage, a reverse mortgage, etc.
Of course not all of that covers every person's situation, so feel free to elaborate on your own if you think there are important details that should be known, such as buying your new primary residence in another state, having a co-signer, buying a home from someone you are related to, the home you are buying is on an Indian reservation, you are employed by family, you aren't a US Citizen, your employment will start after you are buying, your down payment is coming from your current home when it sells, the seller is crediting you $5k towards your closing costs... just to name a couple. If even if you think something is not important, don't leave it out, as it might have a bigger impact than you think.