Three Challenges to Getting A Mortgage in 2011

Three Challenges to Getting A Mortgage in 2011

Unfortunately, for many people, getting a mortgage, even a VA Loan, in 2011 is still a challenge. Below what follows is a quick look at some of the most common challenges that mortgage applicants are facing as they try to qualify for a mortgage. The three most common problems in 2011 for getting a mortgage are: home values (appraisals), income sources, and employment stability. 

Below, I will look at each of these areas.

  • Appraised Values

  • Income

  • Income Sources

Appraised Values

No matter whether you are buying a home or are looking to refinance your current mortgage, the value of the property is critical to whether you can get a mortgage or not. Home values in many parts of the country are still well below the values they were several years ago which is where many current home owners get into trouble. With sagging home values many homeowners around the US are finding it nearly impossible to refinance because their mortgage balance far exceeds their home’s value. With this as the case underwater homeowners are left with no option to refinance and only the option of staying put, short selling their home, or letting their home go back to the bank in a foreclosure process. For purchase deals, the flip side of the coin is that the property valuation required by the mortgage company can often come in less than the negotiated sales price which could mean the seller declines to sell the home leaving the buyer looking for a new place.

Income

Proving income is an extremely important part of qualifying for a mortgage. The thumb rule is simple – you want to be able to provide a thorough paper trail for your income for at least the past 2 years if not 3 and your latest 30 days worth of pay stubs reflecting a year to date figure. If you have any significant gaps in your income over the past 2 years or so you will need to be able to explain what happened.

Income Sources

As a result of the sagging economy, many people have found additional ways to make to stay afloat. For many applying for a mortgage – having and counting on different streams of income is critical. The challenge about income streams is that they must be seasoned for at least 2 years. What this means is that being a strong credit candidate with money in the bank for down payment may not be enough if you are self-employed and have only been self-employed for less than 2 years. You may also have problems if you are just starting to get overtime, or you are just starting to get commission income with your new job.

What To Do

In summary, it is best to work as much as you can for as long as you can with no layoffs, while saving as much money as you can. I know this seems like a pipe dream, but in all cases it will help you with qualifying.

This site is for informational purposes only. It is not sponsored or in any way affiliated with the government. If you are in need of a mortgage loan, consult with a licensed mortgage professional. All fair housing and equal housing opportunity laws apply when applying for a mortgage or buying a home. Copyright 2012.