- Part-time income can be counted assuming that you have been receiving the income for at least two years without interruption and that it is anticipated to continue.
- Overtime and bonus income that has occurred for the past two years and that will probably continue can be counted.
- Retirement income
- Military income
- Veteran’s benefits
- Social Security income
- Child support
- Alimony
- Interest/dividend income
- Rental income
- 1-unit properties : $417,000
- 2-unit properties : $533,850
- 3-unit properties : $645,300
- 4-unit properties : $801,950
- Be able to document your income.
- Plan on buying a home that you can afford.
- Pay your bills on time and keep an eye on your personal credit worthiness.
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What Will Lenders Accept As Income?
If you are planning on getting a loan today, be ready to document and verify your income. In general, lenders are going to want to verify two years of history for all income sources - full-time or part-time. If you are self employed, you will need to show two years in the same business and provide federal income tax returns.
Here is a quick checklist of additional income sources that may be considered:
In general, when calculating income a good rule to remember is the 2/2/2 rule. If you are wondering if the underwriter is going to “count” it as income, you should have at least 2 W2 pay stubs or have tax returns for 2 years and expect any part-time/over-time to continue for at least 2 years.
New Standard Good Faith Estimate Effective January 2010
Today it was announced that HUD has adopted a new 3 page Good Faith Estimate as part of its RESPA reform package that will be standard among all lenders and go into effect in January of 2010.
The new standard Good Faith Estimate is part of a RESPA Reform package that has been in the works for years. Before the announcement, HUD reviewed approximately 12,000 comments and in considering these comments made changes to what was going to be a 4 page Good Faith Estimate.
According to Brian Montgomery, HUD’s Assistant Secretary of Housing:
“We have carefully considered the concerns expressed from every corner of the mortgage market in developing this rule. I am convinced that we successfully balanced the needs of consumers with those in the business of homeownership. None of us can lose sight of the fact that millions of Americans simply don’t understand all the fine print of their mortgages and this, in many respects, is at the heart of today’s mortgage crisis.”
Personally? I think it is a good idea. It will help standardize information that the consumer is getting from different lenders so that the consumer can make an informed choice and more easily match up the Good Faith Estimate with the Final HUD-1.
See the new Good Faith Estimate Form.
See the new HUD-1 Settlement Statement Form.
2009 Arizona Conforming Mortgage Loan Limits
Loans that are able to “conform” to the underwriting guidelines of Fannie Mae or Freddie Mac are called “conforming” or “conventional” loans.
Conforming loans are probably the “most popular” option for people with decent credit, a job and a “normal” house because in order to get a conforming loan, you need all three. If one of the three criteria changes (credit, employment, loan amount) then you probably will choose a different type of loan for financing such as FHA, Jumbo, sub-prime or handful of other types of loans.
Today it was released that the 2009 Conforming Loan Limit is going to remain the same as it has been since 2006 — $417,000 for a 1 unit, single family residence. The loan limits for 2, 3 and 4 unit residences also stayed the same as they had been since 2006.
Now for the catch:
The maximum conforming loan limits don’t apply to areas that have been named “high cost” by the government.
There are 59 designated high-cost regions in the U.S. and most of them are in California.
For everyone in Arizona, the 2009 conforming loan limit is $417,000.
One question we got recently made us scratch our head…
“So how is it that Salt Lake is considered a high-cost area and Scottsdale isn’t?”
New Fannie Mae Guideline: 85% Is New Maximum LTV For Cash-Out Refinances
If you are considering refinancing your primary or secondary home and turning some of your equity into cash, you want to seriously consider acting before December 13th of this year.
Why?
Because Fannie Mae has released some upcoming changes to it’s automated underwriting engine and the changes that are coming mean less cash in your pocket.
For primary residences, the new maximum loan-to-value will be reduced to 85% from 90% currently.
For second homes, the new maximum loan-to-value will be reduced to 75% - down from 80% currently.
This means if your primary home has an appraised value of $200,000 and you want to refinance it to get cash for any reason…
Before December 13 you can get up to $180,000.
After December 13, you can only get up to $170,000 — or $10,000 less than you could get if you act before the deadline.
Freddie Mac Tightens Underwriting Guidelines
Freddie Mac has announced a few changes in their underwriting standards and effective February 2, 2009 they will no longer be buying “Stated Income” mortgages at all. In addition to outlawing stated income loans, the new maximum debt-to-income ratio will be 45% and new minimum credit scores will be increased.
The bottom line of these recent changes?
If you do these three things, you will be just fine when applying for a mortgage!
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