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We are within two weeks of closing on a house, but the underwriter has apparently raised a red flag on our application.
The situation is that we are purchasing as 1st time home buyers with a 10% downpayment and my income alone is enough to handle the monthly payments with good ratios. But, the bank wanted us to include my wife's projected income too (gives us 18/26 for our debt to income ratios), I think because of our low down payment. My wife is a under contract as a first year teacher. Her start date was July 1st but her 1st paycheck does not come until mid-August.
The underwriter wanted to know if she was tenured or her contract was otherwise guaranteed for next year. It's not, and apparently that is a problem and her income might have to be excluded. We were supposed to get a response back on this yesterday afternoon and are still waiting.
Does this sound right though? I thought I had read specifically about first year teachers under contract being allowed to use their projected income. The underwriter passed on no other information to our lender other than that the contract might not be acceptable if it was for only one year, but all teacher contracts are for only one year. Any idea what, if anything, we can do about to try to pre-emptively cut off any issues?
If your income is adequate to qualify including all debts this shouldnt be an issue. Your income would have to cover all debts in your name, her name and jointly held.
We are within two weeks of closing on a house, but the underwriter has apparently raised a red flag on our application.
The situation is that we are purchasing as 1st time home buyers with a 10% downpayment and my income alone is enough to handle the monthly payments with good ratios. But, the bank wanted us to include my wife's projected income too (gives us 18/26 for our debt to income ratios), I think because of our low down payment. My wife is a under contract as a first year teacher. Her start date was July 1st but her 1st paycheck does not come until mid-August.
The underwriter wanted to know if she was tenured or her contract was otherwise guaranteed for next year. It's not, and apparently that is a problem and her income might have to be excluded. We were supposed to get a response back on this yesterday afternoon and are still waiting.
Does this sound right though? I thought I had read specifically about first year teachers under contract being allowed to use their projected income. The underwriter passed on no other information to our lender other than that the contract might not be acceptable if it was for only one year, but all teacher contracts are for only one year. Any idea what, if anything, we can do about to try to pre-emptively cut off any issues?
Sounds like there is no reason to have your wife on the loan. With decent credit you should be able to get approved with debt ratios twice that high. Even with 5 or 10% down.
They took one look at my wife's credit and left her off the loan. She is on title, but her credit wasn't good enough to even help us. We didn't need it with my credit and job history thankfully.
While my credit is solid, my wife has amazing credit. The underwriter ended up accepting the contract though apparently, as we never heard another word about it.
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