Fannie Mae changes make it easier to qualify for a mortgage

 Investment, Loan Guidelines, Residential Mortgage  Comments Off on Fannie Mae changes make it easier to qualify for a mortgage
Aug 262015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

Let’s look at some recent changes to loan guidelines that make it easier to qualify for a mortgage. These changes apply to Fannie Mae conventional loans.

– First, many folks, especially those employed in sales, have been penalized when applying for a mortgage if they write off business expenses on their tax return. Underwriting rules said we had to deduct the written-off amount from qualifying income. Fannie has changed that. For salaried borrowers or those with commission income that’s less than 25% of total income, the new rules say we can ignore the expenses.

– Second, with recent home price appreciation, some homebuyers are choosing to keep their current homes and rent them. Previous underwriting rules required that the current home have at least 30% equity in order for us to count the rental income and required the homebuyer to have extra cash or reserves to cover up to 6 months of housing payments on the current home. The new rules eliminate the 30% requirement, but the homebuyer still may need reserves depending on the financial strength of the borrower.

– And, finally, if reserves are required, a borrower now can use 100% of vested retirement account balances to satisfy the requirement. The previous rules required that we use a discounting factor of 60%.

File tax return extension if closing mortgage soon

 Loan Guidelines, Residential Mortgage  Comments Off on File tax return extension if closing mortgage soon
Apr 012015
 

For more information, please contact me at (512) 261-1542 or steve@LoneStarLending.com.

By G. Steven Bray

If you’re planning to apply for a mortgage, your lender likely will ask you to sign an IRS form that allows it to order a transcript of your tax returns. This is despite the fact that you also provided copies of your returns. We love redundancy.

As we approach the tax filing deadline, you need to keep in mind that when you file your return, the IRS doesn’t make it available immediately. If you file electronically, your return generally will be available 2 to 3 weeks after filing. If you file on paper, you can expect to wait 6 to 8 weeks if you’re due a refund. You’ll wait until mid-to-late June if you have a balance due.

These times are important because once we pass Apr 15th, your lender will expect you to provide either a copy of your 2014 return or a copy of the request for extension. If you provide your return, you may not be able to close your mortgage until the lender receives the tax transcript from the IRS. Thus, if you file on the 15th, closing on the 30th is risky.

If you plan to close in the next couple months, the safest bet may be to file for the automatic extension even if you already have completed your taxes. That way you won’t have to worry about any backlogs at the IRS.