There are 5 mortgage qualifying situations that require special attention. If your client has a similar scenario like the ones listed below please contact me so we can determine quickly if your client will be able to secure financing.
Self-Employed Clients – A person is considered “self-employed” if they own 25% or more of any business. This includes partnerships and LLCs. I will need 2 years’ of business and personal tax returns. Problems arise when someone states they “don’t show all of their income” – or they “write off” all their expenses—and show no income.
Divorced/Previously Divorced – Going thru a divorce can wreak havoc on a person’s credit. But more often than not, it’s the “joint debts” that still show up on the credit report that becomes a problem. This is especially true if the person had a mortgage with their ex-spouse and has not been released of liability. We will have to prove (with canceled checks) that the ex is paying the payments on time. Typically we will need a copy of the Final Divorce Decree.
Job-Hopping Clients – It’s not a bad thing if they change jobs, within the same industry, with very little time off between jobs. It shows a lack of “job stability” if a person hops from job to job or working for a “temp agency”. We like to see no more than a 30 - 60 day gap in employment over the last 2 years.
Foreclosure, Short Sale, Deed in Lieu – Simply put, there are pre-determined “waiting periods” before your clients can apply for a mortgage. There are shorter waiting periods for those who have had a short sale or deed in lieu (versus a full foreclosure), but the shorter the waiting period, the more money they’ll need for a down payment.
Bankruptcy – Waiting periods apply here too, but it depends upon which “chapter of the bankruptcy code” they filed under. The bankruptcy has to have been “discharged” and all the paperwork, including a schedule of debts is needed for me to review. There are extenuating circumstances (medical, death of a spouse) which allows a shorter period of time—but divorce or job loss is NOT considered an extenuating circumstance.
If your clients have one or more of the above situations it is certainly possible they will be able to secure financing. I will need to closely analyze the details of your clients particular situation to determine if, and how to proceed.