Pregnancy and the Mortgage Application, Time to Clarify Some Miss-Information in the rain

 There have been numerous blogs this week that discuss pregnancy and the inability to get a mortgage. The blogs make it seem as if banks are sending pregnancy test kits with the disclosure documents and after reading more than one blog, and the comments, I felt the need to set things straight.

First off this has nothing to do with pregnancy. There is nothing new here at all.  We are talking about good old fashioned mortgage guidelines that have been around for decades. We are in a Full Doc World and we need to document income and employment.

Here is how Employment and Income is verified:

• Review pay stubs, W2's etc... If the stubs mention disability or maternity leave it is a red flag

• Call the employer: "Does Jane Doe work there?" This call is often made just before closing since guidelines require a "fresh" verification. If the borrower is on a temporary leave it WILL cause a problem.

Why?It is pretty simple, mortgage guidelines require income streams to last at least 3 years to be considered for qualifications. Maternity leaves are not permanent income, they are often only for a few months and may only be a form of short term disability.

Will a loan be denied if some one is on maternity leave? No, But the closing may be postponed until the borrower returns to work. The guideline has always required a pay stub to prove the borrower has returned to work. This is not just for Maternity leave, it could be for any form of temporary disability.

This is not a discrimination item, it is purely an income issue.  It is also Mortgage Banking 101... The basics that have been in the guidelines for decades. So be careful of what you read, and the source is important as well. A lot of the uproar was from an article floating out in the media that sensationalized guidelines as if they were some new 2 headed beast, The media often takes the side of an issue that will sell things rather than inform accurately.

We keep hearing it is hard to get a mortgage. This is not really a true statement at all.  If you pay your bills on time, have a small down payment and a Job, it is pretty easy to get a loan. It is harder to get a loan now if you have crappy credit, Don't have a job, or Don't declare your income.   I laugh to myself everytime I have to say this: "You need a Job to get a mortgage"  How dare we ask a client how they plan to pay us back?!

 

Have a great week!

Rob

Robert Rauf

Mortgage Banker

NMLS ID# 248937

www.RobertRaufHomeLoans.com   or my blog: http://activerain.com/blogs/rrauf

(732)223-1630 x102

RRauf@REMN.com

Since 1987 I have been helping my clients fulfill their dream of home ownership!

Real Estate Mortgage Network Inc.

 

 

 

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