One of the most important things consumers have to deal with when securing mortgage loan financing besides having a good credit score and a good down payment is having income to actually offset the proposed liability i.e., a mortgage payment. Income is single-handedly the most important thing because it drives affordability. Lenders and banks know this and as a result, a mortgage, much like a credit card, is made against your income.
So, let’s say you’re at the preapproval stage, you’ve given the lender all requested docs. Let’s say in this example for whatever reason you just don’t qualify for the amount of purchase price you’re desiring to try to purchase.
Your options are:
• pay off debt
• change the loan programs
• put more money down
• get a co-signor
Those are generally the ways you can enhance borrowing power. Another pragmatic way is that if you happen to be getting a brand new job as long as it’s in the same field and you’re earning more money. The new job needs to be bona fide and legitimate. This new income can be considered which in turn you go to apply for a mortgage would increase your borrowing power. You will likely need an offer letter, a start date, and the lender will need to perform a written verification of employment to validate the employment.
If you are getting a raise in the next few weeks, the lender can get a letter from the employer documenting the compensation change and you can use your new income to help you qualify as well.
Not all lenders will count your new job income the same. Be sure to ask this to the lender when you are seeking out a mortgage company. Don’t be fooled by the wise cracking ultra-low rate lender that seems to be cheaper than everyone else promising you the world. Work with someone who is real and tells you what you need to hear vs. what you want to hear.
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.