Are you are a renter in a house or apartment? Are you living with your parents, or a friend?
If you feel that all of your efforts have gotten you nowhere, this is for you. These are the important points that we look at when qualifying potential homebuyers for a mortgage.
(1) Your residency for the past two years must be acknowledged on the application. It does not have to be the same address for two years.
(2) Have you been paying rent for the last two years? Have you paid rent for the last one year? The more you can document your rent history, the stronger your file will be. How do you pay the rent? Do you pay with cash, check or money orders? Whether you live at your parent's home, rent or live with someone, always pay them rent. Also, pay it at the very beginning of the month, or at least the same time each month to create a pattern of regularity. It is always best to pay with either a check or a money order. The reason is that's it can be documented.Not only how much you have paid, but when you paid it. Keep a copy of the money orders or copies of the front and back of the cancelled rent checks. I always suggest you pay an amount that more resembles a housepayment if you live with a relative. Something called "payment shock" is a consideration with some files. Payment shock is the difference between what you are paying for rent now vs. what your new housepayment will be. If you are paying a private landlord or your parents, tell the recipient to deposit or cash the check as soon as possible. The reason for that is that if the person holds on to the check, it may be cashed after the first of the next month. That might appear that you didn't have the money for the check to be cashed. Remember, the front and back of the check may be needed later when you apply. If you live in an apartment complex that is run by a management company, a "vor" or verification of rent will most likely be required for your file.
(3) Work history is also acknowledged for the past two years. It too, doesn't have to be at the same employer, but if your work history is in the same line of work, it makes for a stronger file. Also,the application asks if you are or were self-employed. If you work for a company and and do not receive a w-2, then you are considered self-employed. Unless you are using a program other than "full doc", you will have to submit tax returns as proof of what you make and the trend in income. Does your income show an increase? Does it show a decrease?. Maybe it has been steady. 1099's alone without tax returns will not be honored as sufficient proof of income.Federal retuns only are needed, not state returns.
(4) Gross monthly income is listed. This is the starting point in your file for figuring your "debt ratio". It is the math problem that drives how much useable income you have vs. the new housepayment and your remaing debts. Different mortgage programs allow different debt ratios. Income you are receiving outside of just your job can be considered too. E.i. child support, alimony, annuity payments, anything. First of all, it typically has to be documented as being received for sometimes three to six months, and that it will continue for at least three years. If you are an applicant that receives child support, the ages of the children must be proven to show that it will continue for three years or more. This is usually done with either a final divorce decree or a support order issued by the court.
(5) Your liquid and non-liquid assets are required on most, but not alll files. Do you have any money in your accounts? Will there be any there after you close? Some loans require source or seasoning of the funds. If you have money left after closing, that is called reserve money or as we call it PITI (short for principle-interest-taxes and insurance) how many months is dictated by the type of loan you are pre-approved for. Many first time buyer loans do not require any reserves. If you have reserves, it always makes for a stronger file.
