Home buyers in Colorado Springs often worry more about the house they need to find vs. the mortgage loan. Over the past few years, the mortgage industry has changed tremendously and qualifying for a mortgage loan is becoming more of a challenge for today’s home buyers.
Although a buyer may prequalify for a home, that does not guarantee the buyer will be approved for the loan. Buyers may oversee a few factors that may negatively impact their ability to qualify.
- Student Loans– Depending on the type of loan a home buyer is considering, student loans can pose a problem in qualifying for a loan even if they are deferred or in forbearance. For example, buyers looking at obtaining an FHA loan should not have an issue if the loans are deferred or in forbearance for the next 12 months. If you have student loans, make sure and get more information from your lender on whether or not the loans will be calculated into your debt to income ratio.
- Child Support and Daycare– Many home buyers do not realize that paying for child support and/or child care may impact their debt to income ratio. If you pay toward child support and/or child care, speak with your lender to find out if it will negatively impact your loan qualification.
- Bonus or overtime income– Most lenders will not consider or calculate additional income from bonuses or overtime when it comes to a buyer’s debt to income ratio. If the buyer has been consistently receiving the bonus or overtime income for at least two years, the income may be included as income.
- Cash– Lenders expect buyers to account for all money in their bank accounts and will verify income by requesting pay stubs, a gift letter (if money was gifted to the buyer), etc… If a buyer had a recent cash deposit into a bank account that cannot be explained, the lender may not consider those funds if the buyer desires to use the monies for down payment or earnest money.
Better to figure everything out sooner than later! Many closings are called off days before to closing due to factors stated above!
Contact me Patricia Beck, your Colorado Springs Realtor® if you are interested in buying a home in Colorado Springs at 719-660-9058