Wednesday, March 7, 2018

Can You Still Get a Loan With Gaps in Your Employment History?

Having gaps in your employment history won’t prevent you from getting a loan as long as you’re open and honest about them.

When you apply for a mortgage, you have to provide employment history. Within the three qualifiers of getting a loan, credit, income, and assets, employment history falls under the income category. 

Most people don’t realize that you have to have a minimum employment history of 24 months to qualify for a loan, and one of the common things we see with people qualifying for a loan is gaps in their employment history. Gaps in your employment history won’t automatically disqualify you from getting a loan, though, and there are ways you can address this problem. 

First, there are legitimate reasons why someone would have gaps in their employment history (maternity leave, school, a medical issue, etc.), and that’s OK as long as you explain what your reason may be to your lender in advance and document it on your loan application. This kind of thing will usually pass through underwriting without issue. I once had a client who had a 10-year employment gap because he’d been incarcerated during that time, and we still managed to secure him a mortgage loan. 

Without the proper information, we can’t help you buy the home you want.

Having frequent employment gaps or job changes is another issue that doesn’t necessarily have to stop you from getting a loan as long as it’s documented properly. You should try to limit any job changes when you’re in the middle of a transaction, though. A lender will look at a borrower with frequent job changes and question things like whether they’re working in the same field and if their income is consistent, so if you can prove those things and verify your correct places of employment, they can order the proper documentation you need to qualify. 

When you do change jobs, most lenders require that you’re at your current job at least 30 days, so that’s important too. They sometimes make exceptions, but if you’re in the middle of signing a contract for your new job, that could delay your loan closing. 

Keep in mind, the reasons we have to address any employment gaps to verify your income are is because of the laws and rules already in place; we have to prove that you can make a mortgage payment. It’s our job to help you get qualified as long as it’s within the rules, so be honest and open with your lender about every job you’ve ever had. Without the proper information, we can’t help you buy the home you want. 

If you have more questions about this topic or there’s anything else I can help you with, don’t hesitate to reach out to me. I’d love to help you.

Wednesday, February 21, 2018

Tips for Qualifying for a Home While Self-Employed

Being a self-employed homebuyer can be tricky. It doesn’t have to be, though.

Click here to see if you qualify for a loan

Self-employed borrowers have to go through more hurdles than most when it comes to qualifying for a mortgage. When you are your own boss, you don’t have anyone to report to. If you’re a solo agent, you definitely don’t have somebody keeping track of all your finances and money for you.

Self-employed borrowers don’t have W-2s like most people. A lot of them have 1099s instead, and there can be quite a few complications that come up with these when it comes to qualifying for a loan. If you’re self-employed, here are three easy tips that will greatly increase your chances of qualifying:

1. Find a good accountant or CPA. Not all of them are the same and not all of them will be able to give you the best advice when filing your return. Even though you might make a lot of money, your qualification is really based on what you report and how you report it. There’s that fine line to toe between claiming enough to buy a house and taking all the deductions you can as a business owner. However, a good accountant or CPA will be able to help you minimize your tax risk without having to get rid of all your write-offs.

2. Find a mortgage company with savvy underwriters and loan officers. Experience is very important here. Business tax returns come in all shapes and sizes, so it’s important that you hire someone who has seen it all and understands the self-employed borrower and how to maximize their buying power.

Going to a big bank might not be your best option.

3. Find a mortgage banker. A lot of times, people want to go to the big banks to get a loan. However, the big banks typically don’t have people who are self-employed (like myself) reviewing your documents for you. It’s a one-size-fits-all approach, but what you really need is a custom plan. That’s definitely something our team can assist you with.

If you have any questions for me about this topic or anything else relating to mortgages, taxes, or loan programs, don’t hesitate to give me a call or send me an email. I look forward to hearing from you soon.

Friday, February 2, 2018

A Foreclosure Starts With a Missed Payment

What happens when you miss a mortgage payment? We’re exploring that today.

Click here to see if you qualify for a loan

Today we’re going to be talking about what happens if you miss (or skip) your next mortgage payment, and what happens when those missed payments start to add up.

The first thing to know is that every mortgage has a grace period. Typically, you have a 10 to 15 day window to make your payment where you won’t be charged any late fees. If you do pay after that 15th day, however, your lender will charge you a late fee. Something around 4% to 5% of the payment. That’s around $80 to $100 on a $2,000 payment. That may not seem like a lot of money, but it adds up.

However, the late fee isn’t the big problem. The big problem is with the credit. If you are late with your payments, you need to understand how it will affect your credit in the long run. Most lenders won’t report the missed payment to a credit bureau until it’s 30 days late or more. If you pay before that 30th day, it won’t be reported negatively on your credit. If you go 30 days late and it is reported, you will see a 50- to 100-point drop on your score. If you've never missed a payment before, it might drop even more than that.

Once a payment is over 30 days late, you might be wondering if you’re in danger of being in default. There’s a misconception out there that lenders want to foreclose on you. They really don’t. The banks want to keep you in your house. While being late on a few payments will affect your credit score and payment totals, they typically don’t start any foreclosure proceedings until you are 90 days late or more.

If you know you’re not going to be able to make your payment, what are your options? Most people are afraid to call their lender, but it’s actually the first thing you should do. They might be able to give a special forbearance or they might be able to switch up your loan a bit to lower the monthly payment. Either way, they are the first person you should talk to. There are also numerous other options that can help you from legally going into foreclosure.

Setting up automatic payments is a great idea.

To prevent yourself from any late payments in the future, one of the best ways is to keep yourself on an automatic payment plan. You want to set that up as the first bill you send every month. It reports to your credit, it helps you build up your equity, and it keeps you in your home.

If you have any questions for me about foreclosures, mortgages, or anything else, don’t hesitate to give me a call or send me an email. I look forward to hearing from you.

Monday, January 15, 2018

Post-Approval Do’s and Don’ts

After you’ve been approved for a mortgage loan, there are some things you should and should not do. Find out how to keep your loan status safe.

Today we’ll be discussing the do’s and don’ts you need to consider after you’ve been approved for your mortgage loan.

The first thing to do is always pay your bills on time. Numerous times throughout the transaction, I’ve seen people stop paying their debts after getting approved. Remember, all the way up until the day you close, your lender has the right to check your credit again. It doesn’t happen often but you don’t want to take the chance, so make sure you’re getting those payments in on time.

The next thing to do is keep your job. Your lender can also verify your employment status on the day of closing, so it’s very important to be honest with your loan officer if you have a job change in the future. Let them know immediately because changing jobs won’t get you denied, but it could slow down the transaction. You could lose the house you want if you don’t use proper communication.

Don’t forget: all the way up until the day you close, your lender has the right to check your credit again

You should also safeguard your assets. You need to continue to save money even after being approved because there’s always a chance that a bump in the road will come along and you’ll end up not being able to afford the home you want. That said, when you keep your assets, don’t deposit cash. Banks have to verify everything, including where all the funds come from, if, say, you receive a cash gift from a family member.

Lastly, don’t be silly. Most of the time when people are denied loans, it’s because they were
dishonest with their lender. Tell them what you’re going through; they’re there to help you
get through the next round. Additionally,
don’t make huge purchases right before closing or get

married. Keep in mind that lenders can pull your credit at any point before closing, and huge purchases
or changes to your marital status can have adverse effects on your credit, which could damage
your chances of getting the home you love.

If you have any questions or know someone who’s looking to buy, sell, refinance, or invest in real estate, feel free to contact us. We look forward to helping you, your friends, or your family close on their home in 2018.