Getting a mortgage is not as simple as showing your ability to pay, having good credit, and good down payment. It also must pass a test period of Fannie Mae and Fannie Mac’s automated underwriting. This is something you should be aware of as it pertains to buying or refinancing a home. If your situation is a little unorthodox, here are things to consider on how a mortgage underwriter is going to evaluate your mortgage application.
Every lap dictation must make sense. That “makes sense” test is what a reasonable logical person needs to make this decision. If the answer to that is yes, your loan will be approved. If the answer to that is not yes, then more information is needed. This is the area between the loan not being approved and you prove your ability to do the loan in the way in which the loan is structured. Let’s say you have a primary home, and you’re desiring to buy a new primary home. The new primary home has a mortgage payment that’s higher than the current home. If the primary home that you’re desiring to purchase is the same size as the home that you’re vacating, that could be questioned by underwriting. Particularly if the purchase price of the new home and the payment on the new home is higher. You also must take into consideration where is the new house about where you physically work. As a rule of thumb, a primary home transaction is within about an hour’s commute of your work. If the house that you’re desiring to purchase as a primary home is outside of an hour commute time frame, you’re going to have a tough time getting that loan approved unless there is additional information. Maybe you work half the week in one area and half the week in another area closer to the subject property. That’s a possibility. Maybe you can tell a commute and you only have to go to the office one day per week, again that’s another possibility.
What if you live in the state of California? California’s real estate prices are much higher than for example Texas. Say you’re a nurse in the state of California, you want to buy a new primary home in the state of Texas and you’re going to move out there in a few months. In your profession as a nurse could you telecommute? If you don’t, you’ll need to have a new job lined up in the state in which the subject property is located. Or you can buy the property in this scenario living and working in California. Then buy the new house in Texas as a second home. This means you must have enough income in your nursing profession to offset whatever your house payment is here in California. Even if it’s a rent payment that will still be counted in your debt ratio as well as the mortgage payment for the new house you’re desiring to acquire. Second homes require a 10% down payment for a single-family residence. If you don’t have enough income on your own, you would need to have another borrower on the loan with you to make such a scenario work or have a new job lined up in the area in which you’re purchasing.
Here’s another one. You’re looking to buy a new primary home, but you don’t have any money saved up. All the money that you have for the down payment is in the current home that you own. You’re not sure when you’re going to buy a new home, but you want the opportunity to buy a new home without any obstacles in your way. You could cash out and refinance your primary home. Turn it into a rental property if you intend to keep it. You’ll pay a higher interest rate, but you’ll be able to get rent from the house that you’re departing which can help offset the mortgage payment as it relates to qualifying for the new home to purchase in the future.
Every situation must make sense. A quality loan officer who is experienced and understands the backward and forward types of scenarios, particularly in more challenging loans is a far better bet than picking the lowest priced lender who doesn’t have the resources, scope of understanding, or platform to support a more unique loan scenario. This is something to think about if your situation is anything outside of the ordinary.
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