With all the changes that have taken place in the Mortgage Industry over the last few years (and those to come soon), I've come to believe that my job as a Mortgage Lender comes equipped with a text book. This text book has no last chapter. It has no back cover. It's never-ending ...
Even with all the changes though, one constant has remained. That constant?
INCOME ...
A Borrower's income matters immensely. It might be said that it even trumps credit.
According to recent statistics regarding Mortgage Delinquencies and Foreclosure Rates, loans made since 2011 after heightened Mortgage rules/regulations were put into place, are performing well and now account for only 5% of all seriously delinquent loans.
Financing Reform put into place during January of 2014, led to the Ability to Repay/Qualified Mortgage Rule and policy ... ATR/QM. The concept of this policy was fairly simple:
Keep Borrowers Debt-to-Income Ratios at 43% of Gross Monthly Income.
I'm not trying to be sarcastic when I say that Borrowers with adequate income levels tend to make Mortgage Payments on time. It makes sense. Their "capacity to repay" is good.
But all this might make you believe that credit, credit history, and credit scores matter ... and perhaps even trump all else financially. Truth is, even a well-intentioned Borrower with a desire to pay on time, paired with an excellent credit history and credit scores, can't do so if income or assets in reserve aren't available and enable them to do so.
Job loss, pay reduction, uneven income levels (both for commissioned and self-employed persons), loss of spousal income, and more ... all make it hard for Borrowers to meet financial obligations.
I've learned through the years while helping my own clients, as well as those of Loan Officers I manage, that even Borrowers with good jobs and stable income can have less-than-perfect credit. It's true that credit requirements have become more restrictive in recent years. But financing options exist ... even for those with FICO Scores under 620.
* I'll add that financing options exist for those that do not have 20% Down. For more info on those options, read, "You Don't Need a 20% Down Payment to Buy!"
Lower credit scores and the ability to make low/no down payments do not have to be disqualifiers for mortgage financing! But not having what is deemed a suitable job history or sufficient monthly income will be. At least temporarily.
Unfortunately, size matters when it comes to income. Or more correctly, the size of your monthly debt versus your monthly incomematters.
Every level of wage earner that dreams of owning a home deserves availability to credit and financing. But it is remains key to Borrowers and their Mortgage Lenders to stay within Debt-to-Income Guidelines at all levels ...
* Hoping to Buy, Build, or Refinance a homein New Lenox. Lincoln-Way area, Will County, or elsewhere in the Chicagoland area? Contact me today! I'll answer your questions and put my 37 years of Mortgage experience to work on your behalf.
I can be easily found at:
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