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Me & my boyfriend are 1st time homebuyers. He found a mortgage broker (friend of a friend) who needs our net incomes from 2008 & 2007 & monthly net income for 2009 to really determine how much of a mortgage we can afford.
Is this normal? I thought they work from gross. Supposedly the mortgage broker said gross doesn't tell anything since what you actually get is such a drastic difference
They should go by net income anyway, they seem to be tightening lending standards due what happened in the bubble.. i.e.. "You make $10/hr, we can get you into a 300k house no problem!"
Me & my boyfriend are 1st time homebuyers. He found a mortgage broker (friend of a friend) who needs our net incomes from 2008 & 2007 & monthly net income for 2009 to really determine how much of a mortgage we can afford.
Is this normal? I thought they work from gross. Supposedly the mortgage broker said gross doesn't tell anything since what you actually get is such a drastic difference
Mortgage lending only uses gross income to figure out DTI and how much you can borrower (assuming you are both W-2 wage earners).
We are both W-2 wage earners and are only applying for a mortgage. Is it wrong that they're asking for net income??
I would make sure you are understanding them correctly. It is completely wrong to use net income. Everyone has different deductions on their checks and many of them are optional.
Also, are you sure this 'friend of a friend' is a skilled mortgage originator (i.e. do you know any satified customers that have used him, especially first time buyers)??
I would make sure you are understanding them correctly. It is completely wrong to use net income. Everyone has different deductions on their checks and many of them are optional.
Also, are you sure this 'friend of a friend' is a skilled mortgage originator (i.e. do you know any satified customers that have used him, especially first time buyers)??
That's the same thing I thought. My realtor gave me the name of a mortgage person they use. Is it wise to go with their recommendation??
If your boyfriend had a good gross income, but state ordered child support was with held from his check for numerous children----------the amount of mortgage he could afford would be greatly reduced using net income.
My bf said this was the explanation of using the net income:
The net income is what he uses to help buyers understand what they can afford, since he wants buyers to be aware that only net income is vailable to pay bills. He said this is just to get a realistic picture of what you can afford.
The gross is what is used to figure out how much mortgage you qualify for.
The net can vary (for example, you could currently contribute 15% to your 401K and plan to scale down after the home purchase)
It sounds like he is using the net more for counseling purposes? Like to help you figure out your comfort zone? That doesn't sound like a bad idea (you should probably be doing a variant of that yourself, to see how much you would be comfortable spending) but I don't think the net will determine your qualification.
You probably aren't "required" to give it him, though your pay stubs will show both, whoever you give them to.
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