Qualifying For Mortgage In 2015

Qualifying For Mortgage

Gustan Cho Associates

Qualifying for a mortgage loan is now easier than it was several years ago.  Qualifying for mortgage in 2015 is simpler and more streamlined than it was right after the mortgage industry went through a major overhaul after the mortgage collapse of 2008 and after new regulations went into effect.  With the combination of lower mortgage rates and mortgage lenders loosening their overlays and both FHA and Fannie Mae and Freddie Mac lowering credit standards and trying to promote homeownership, more and more home buyers can qualify for a home loan and the mortgage loan approval process can now take as little as three weeks with most mortgage lenders as long as the necessary documents requested by the mortgage underwriter can be provided by the mortgage loan borrower in a timely manner.

Mortgage Lenders Loosening Overlays

Mortgage lenders are still extremely cautious and very fearful of foreclosures.  Lenders want to make sure that the borrower is qualified and has the ability to repay their mortgage loans.  New laws that was implemented in 2014 include Qualified Mortgage laws which includes that the mortgage lender needs to make sure that the mortgage loan borrower is suited for the particular mortgage loan and the mortgage loan borrower has the ability to repay their new mortgage with no financial strain and that the new payment is in line with minimum debt to income ratio guidelines.

Requirement By Mortgage Lenders

Whether you are a first time home buyer, seasoned home buyer, or a refinance mortgage loan borrower, mortgage lenders will require the same documents from every mortgage loan borrower.  It can seem like a major headache and a lot of red tape, but if you prepare yourself that you will be going through a process in order to get your mortgage loan, it is not really that bad.  It will be bad for mortgage loan applicants who are not organized with their paperwork but even borrowers who are not organized, things can be streamlined where it will not be as bad as it seems.  Things that will be asked by your mortgage lender is the following:

  • What is the current address that your live currently.
  • How long have you lived at your current address and if not lived for at least two years, you need to provide a two year residential history.
  • Do you currently own your property or are you renting?
  • What is the amount that you are currently paying for rent or mortgage?
  • Have you been timely on your rent or mortgage the past 12 months?
  • What is the contact information for your current landlord?

Income And Employment

Income and Employment is probably the most important factor a mortgage underwriter will be concerned with besides credit scores .  Cash income does not count in the mortgage industry. All income needs to be documented and verified by the IRS.  Here are questions that the mortgage lender will ask you about your income and employment:

  • The name of your employer and contact information?
  • Have you been with your current employer for two years and if not, provide a two year employment history, gaps in employment history as well.
  • Gross annual income, copies of two years tax returns, copies of two years W-2s, and most recent pay check stubs and state whether you are an hourly employee, salaried employee, 1099 wage earner, or own your own business.
  • Do you have other sources of income such as part time income, overtime income, bonus income, child support income, alimony income, social security income, pension income, royalty income and did you have it for the past two years and will the income likely to continue for the next three years?

Credit Scores And Credit History

Your mortgage lender will want to know your credit scores and your credit history.  Mortgage underwriters will want to see that you have been timely on your payments the past 12 months.  They will also look for prior bad credit, prior bankruptcy, prior deed in lieu of foreclosure, prior short sale and will need a letter of explanation for what caused the derogatory credit signed and dated by the mortgage loan applicant.  You can have unpaid collection accounts and still qualify for a mortgage loan, however, you cannot have government loans such as student loans that are delinquent or in collections.  Child support payments needs to be current and not in arrears.

Debt To Income Ratios

Your debt to income ratios will be carefully evaluated by the mortgage underwriter.  Maximum debt to income ratios for FHA loans are capped at 56.9% and maximum debt to income ratios for conventional loans are capped at 45% in order to get an approve/eligible per DU FINDINGS .

Qualifying For Mortgage In 2015 With Lower FHA Mortgage Insurance

On January 26, 2015, FHA has lowered the annual FHA mortgage insurance premium from 1.35% to 0.85% for all FHA insured mortgage loan borrowers with 30 year fixed rate FHA loans.  This lowering of the FHA annual mortgage insurance premium has made qualifying for mortgage in 2015 much more easier for home buyers with higher debt to income ratios and those with high debt to income ratios who needed to do a refinance mortgage.

Qualifying For Mortgage In 2015 With Low Down Payment

Fannie Mae and Freddie Mac has re-implemented the 3% down payment on a home purchase for first time home buyers on conventional loans.  First time home buyers, or seasoned home buyers who have not owned a home in the past three years who do not have much money for down payment on a home purchase can now qualify to purchase a home via a conventional loan with only a 3% down payment.

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The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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