U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 05-01-2012, 09:03 PM
 
55 posts, read 208,904 times
Reputation: 33

Advertisements

I've had my current job for less than 2 years(will be 2 years this september). I didn't have a job for 2 years before my current job(worked for 7 years before the 2 year hiatus). My credit rating is 802, 804, 819(wife is probably the same).

Do I have to wait until September for my income to be considered for the mortgage application? Or do I have to wait until I file taxes for 2012?

If I set aside money for Medical or Childcare FSA does that affect the gross income that is used to calculate the mortgage amount? If my wife is pregnant and will take a 3 month FMLA is that a problem?

I have no debt(no auto, student, credit card). My credit card is paid in full every month. Does that mean my credit card debt obligation is $0 in those mortgage calculators?

Do mortgage agents look at my credit card bills, checking accounts? Or just W2's and income taxes for the past 2 years? Do spending habits/%'s matter to these agents? How far back do they look?

If you had cash to buy a home with plenty of money left over(5x the value of your home) would you just pay cash instead of dealing with the hassle of getting a mortgage?

Any answers to these questions would be greatly appreciated.
Quick reply to this message

 
Old 05-02-2012, 05:49 AM
 
Location: MID ATLANTIC
7,602 posts, read 17,634,581 times
Reputation: 8084
Quote:
Originally Posted by MovingCouple View Post
I've had my current job for less than 2 years(will be 2 years this september). I didn't have a job for 2 years before my current job(worked for 7 years before the 2 year hiatus). My credit rating is 802, 804, 819(wife is probably the same).

Do I have to wait until September for my income to be considered for the mortgage application? Or do I have to wait until I file taxes for 2012?

If I set aside money for Medical or Childcare FSA does that affect the gross income that is used to calculate the mortgage amount? If my wife is pregnant and will take a 3 month FMLA is that a problem?

I have no debt(no auto, student, credit card). My credit card is paid in full every month. Does that mean my credit card debt obligation is $0 in those mortgage calculators?

Do mortgage agents look at my credit card bills, checking accounts? Or just W2's and income taxes for the past 2 years? Do spending habits/%'s matter to these agents? How far back do they look?

If you had cash to buy a home with plenty of money left over(5x the value of your home) would you just pay cash instead of dealing with the hassle of getting a mortgage?

Any answers to these questions would be greatly appreciated.
There are some comments in your post that send up some signals to dig deeper. ("If I set aside money for Medical") Are you self employed? Paid on 1099? There's a huge difference from being on 1099 for only 18 months and being salaried for 18 months. It also explains why you are asking about an additional tax return.

What were you doing during your hiatus? Your answer definitely comes into play for a mortgage.

As for your wife's maternity leave, most lenders will require statements that push the employer's comfort zone to count her income while on leave. She would have to have short term and long term disability income while she is out. The percentage on non returning new mothers is extraordinarily high. Again, if she is not at work at the time of closing, the bar is pretty high.

The credit card balances at the time your lender pulls your credit will be those used to qualify you. If you truly pay them off, do so next payment and don't use them until you close (especially if you incur large balances). If you are talking about $200 for one or two, don't worry about it. The $10 calculated payment for the card won't be what stops you (and if it is, things are way too tight to get a mortgage).

800 scores are impressive, but they don't make up for income calculations or lack of history. But they do indicate you pay your bills on time. As for qualifying you for a mortgage, it all depends upon down payment. It sounds like you have the assets to put down 20% to 25%. If that is the case, it's quite likely you will get an approval that requires only one year's tax returns. You want to find a lender that does Fannie Mae or Freddie Mac Direct.........this means there are no additional overlays. (Literally, get on the phone or web and ask lenders if they have Fannie/Freddie direct lending. If they don't know what it is, hang up).

As for paying cash, if you really do have a lot left over and don't have to pay taxes thru the nose to get the down payment, yes, pay cash. But if there is a large tax liability, go for the mortgage, only because getting cash back out the house of it will be 10x harder.
Quick reply to this message
 
Old 05-02-2012, 07:40 AM
 
55 posts, read 208,904 times
Reputation: 33
Quote:
Originally Posted by SmartMoney View Post
There are some comments in your post that send up some signals to dig deeper. ("If I set aside money for Medical") Are you self employed? Paid on 1099? There's a huge difference from being on 1099 for only 18 months and being salaried for 18 months. It also explains why you are asking about an additional tax return.

What were you doing during your hiatus? Your answer definitely comes into play for a mortgage.

As for your wife's maternity leave, most lenders will require statements that push the employer's comfort zone to count her income while on leave. She would have to have short term and long term disability income while she is out. The percentage on non returning new mothers is extraordinarily high. Again, if she is not at work at the time of closing, the bar is pretty high.

The credit card balances at the time your lender pulls your credit will be those used to qualify you. If you truly pay them off, do so next payment and don't use them until you close (especially if you incur large balances). If you are talking about $200 for one or two, don't worry about it. The $10 calculated payment for the card won't be what stops you (and if it is, things are way too tight to get a mortgage).

800 scores are impressive, but they don't make up for income calculations or lack of history. But they do indicate you pay your bills on time. As for qualifying you for a mortgage, it all depends upon down payment. It sounds like you have the assets to put down 20% to 25%. If that is the case, it's quite likely you will get an approval that requires only one year's tax returns. You want to find a lender that does Fannie Mae or Freddie Mac Direct.........this means there are no additional overlays. (Literally, get on the phone or web and ask lenders if they have Fannie/Freddie direct lending. If they don't know what it is, hang up).

As for paying cash, if you really do have a lot left over and don't have to pay taxes thru the nose to get the down payment, yes, pay cash. But if there is a large tax liability, go for the mortgage, only because getting cash back out the house of it will be 10x harder.
I have been salaried for 18 months in the same profession(IT) as I had for the first 7 years of my career. I asked about Medical and Childcare FSA because we will have a pregnancy and childcare expenses within the next year.

I took a voluntary separation package that paid me for 9 months. I decided to try some trading during the 2 year hiatus. I didn't do well(broke even during the financial crisis).
If I wait til September to get my mortgage(2 years under my belt), will they even care about my 2 year hiatus?
How far in advance should I stop using my credit card(and just use my debit card)(6 months? 1 month?)?
Don't Fannie/Freddie loans have higher rates?

Details -
Budget for house 250K - 350K (No tax implications if paid in cash- enough in savings account)
Net worth - 2 mil (550K of that in inherited IRA)
Combined annual wage income - 130K

Thank you for the lengthy/helpful response.
Quick reply to this message
 
Old 05-02-2012, 07:52 AM
 
55 posts, read 208,904 times
Reputation: 33
I was asking about the additional tax return because I simply would like to understand the mortgage application process better. What exactly are the documents required and how far back for each, for someone who is willing to put at least a 30% down payment? What are the differences between Fannie and private(outlays?)?

Thanks
Quick reply to this message
 
Old 05-03-2012, 05:10 AM
 
Location: MID ATLANTIC
7,602 posts, read 17,634,581 times
Reputation: 8084
There are some investors/lenders that are going to want 2 years returns, regardless of logic. Since you were trading, your income and expences, most likely we done on Schedule D. If on Schedule C (and a loss reported), the subsequent return would be reviewed to show you're done w/ the other job. Any lender with Fannie Direct can do this loan.

Down payment no longer determines documentation. I think it would be prudent to get someone to review your returns before you start looking. Documentation you should be ready to provide:

photo ID
2 years 1040's
2 years W2s and 1099's and 1098
Letter "to whom it may concern {about your gap inj employment0
One months current paystubs for all wage earners
2 months asset statements for all accounts (all pages)

Fannie/Freddie rates are sometimes priced higher, but more often than not, they are priced lower than investors (other banks). Once most common reason, when thse other investors have their fill of registrations, they bump their rates to slow things down, while Fannie and Freddie continue to follow their pricing matrix.
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


 
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:
Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top