topic Re: Compensating Factors in Mortgage Loans

Compensating Factors

Bratbaby — Sun, 29 Mar 2015 00:38:42 GMT

Hello all--

Just saw an open house this afternoon; a mortgage lender was there. My husband and I aren't eligible for an FHA loan together due to the foreclosure of his house less than a year ago. I did, however, just get 80k cash from the sale of a house I owned with my ex-husband. When I told the lender this, he said I could possibly qualify for this house by myself. I don't want to get too excited, so I'm doing some research.

Based on just my income, the DTI might be pretty high. I looked into some compensating factors, though, and I actually have SEVEN, including 20% down, large reserves, absolutely no payment shock,
good credit for the past two years, low credit utilization, and of course my husband's income which, while it can't be counted toward the loan, does serve as a factor as I understand it.

How much would so many compensating factors affect a loan decision? A lot, or a little?

Thanks for any information!

Re: Compensating Factors

StartingOver10 — Sun, 29 Mar 2015 13:50:01 GMT

A lot.

Plus you have a substantial down payment. I say have a detailed discussion with a LO and show him your compensating factors to see what happens.

Re: Compensating Factors

Bratbaby — Sun, 29 Mar 2015 14:17:58 GMT

That's good news!

I spoke with the lender and he's going to try the AUS today. I'm not holding out too much hope for that, but given the situation, maybe all these factors would come into play with a manual underwrite.

Ironically enough, the P&I on this house is actually less than rent on a two-bedroom apartment here in Denver. The market here really is the wild, wild West!

Well, fingers crossed. I'll update when I know anything.

Thanks so much!

Re: Compensating Factors

StartingOver10 — Sun, 29 Mar 2015 14:20:47 GMT

@Bratbaby wrote:
That's good news!

I spoke with the lender and he's going to try the AUS today. I'm not holding out too much hope for that, but given the situation, maybe all these factors would come into play with a manual underwrite.

Ironically enough, the P&I on this house is actually less than rent on a two-bedroom apartment here in Denver. The market here really is the wild, wild West!

Well, fingers crossed. I'll update when I know anything.

Thanks so much!

Another compensating factor!

Re: Compensating Factors

Bratbaby — Tue, 31 Mar 2015 02:17:21 GMT

Well, what the hey, pile them on, haha!

Lender ran my credit+taxes+W-2's, and he sounds optimistic. I'm trying to get hold of my boss' boss to verify employment, and the fact that my unconventional schedule has overtime written into it. (8 10-hr nights, then 6 off, rinse, repeat.) The fifth night is always all overtime, per state law. Boss said don't send them to HR, they don't understand this weirdness! XD

Anyway, rustling up maybe just a tiny smidge of hope that this may actually come to pass.

Fingers still crossed!