Getting a mortgage in 2011 is still quite a challenge for many people – even the most qualified. In this post we cover some of the most common challenges you may face if you are trying to get a mortgage – even if it is a va hybrid loan. The three most common problems in 2011 for getting a mortgage are: home values (appraisals), income sources, and employment stability.
Let’s analyze each of these common problem areas.
Home Values – this topic is a major deal killer for sure in 2011, and it is one that can leave many people with an extremely sour taste in their mouth when it comes to their potential mortgage lender. Appraisals for many homes are still showing depressed values from the height of the market that occurred back in 2006. With sagging home values many homeowners around the US are finding it nearly impossible to refinance as 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, or 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 – What you make as income and how you prove are one of the most carefully analyzed item on your mortgage application as you qualify for a mortgage.The key in proving income is to be able to show your last 30 days worth of pay stubs and a year to date total as well as the last 2 years of income. You also don’t want to show any gaps of unemployment – of if you do – you will want to be able to thoroughly explain why you weren’t working.
Income Sources – This is a problem for many people in today’s economy. How different income streams trip people up is that they must be established for a minimum of 2 years.What this means is that being a strong credit candidate with money in the bank for downpayment 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.
To summarize, you want to make sure you have no unexplained employment gaps, and you need two years of solid employment or self-employment history, while saving as much as you can.