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July 16, 2018
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Real Estate & Business

Scott Sheldon
Lending nuances may help you land a mortgage
July 6, 2018

Getting a mortgage in 2018 involves a bureaucratic and compliant process with a significant amount of paperwork. Following are some tips on various loan programs available in the marketplace that you may not know of.

Conventional mortgages 

These will go up to a debt to income ratio of 50 percent. Here is the kicker, if your credit score is extremely good at 764 or above, your front-end housing payment and debt to income ratio can both be as high as 49 percent. Simply put, 49 percent of your monthly income can go towards a housing payment. 

This is significant because on other loans such as an FHA loan, the front-end housingpayment cannot exceed approximately 44 percent of your monthly income.

On a conventional mortgage you can get payment offset that another party makes so long as they are on the note and make the payment directly to the creditor and have for the last 12 months. And it must come from a non-joint bank account.

Arm’s length transactions involve no relationship between buyer and seller. In a divorce buyout situation or in a family purchase situation there is a relationship between the parties which would constitute what’s called a non-arm’s length transaction. Non-arm’s length transactions are eligible loans that can go through; however, it’s going to require careful planning and expertise on the side of the lender to make sure they properly package the file so it will pass through the examination of the underwriter.

If you have an alimony payment and are getting a conventional mortgage here is some information that may help you get qualified… alimony now comes off income and is not counted as a debt. This is huge for borrowing power because it allows you to qualify for a larger mortgage and it lowers your debt to income ratio in the process. Child support however is counted as a monthly obligation like a car payment on both conventional and FHA Loans. FHA and conventional loans both carry this unique and helpful viewpoint on alimony payments.

VA loans will require you to provide a monthly budget when getting final mortgage loan approval of how you’re going to manage that mortgage payment with the rest of the expenses and dependents if you have any in your life. VA may also require a water test when financing a property with a private well. VA Loans must clear the pest report and a purchase transaction cannot be paid for by the buyer at all and any section one termite damage can be specifically paid for by the buyer. On a refinance, the borrower pays for both the report and the work to be completed.

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at www.sonomacountymortgages.com.