Financing

How to Qualify for a mortgage with Student Loans

Getting qualified for a mortgage loan so you can buy that house you really want can be a real *#%$! challenge. Here’s some insight that just may help you get prepared, compliments of Mike Wickham over at Caliber Home Loans (one of my preferred lenders btw).

Good Day!

You might have heard over the last 12 months or less that all loan programs have changed in regards to what lenders will use for a monthly payment when qualifying a borrower/s with student loans. Many borrower/s are on an income based repayment plan with no payment or very little. Most loans will not allow no payment or a payment that is not fully amortized. Most loans programs will require 1% of the balance or to document the fully amortized payment if less than 1%. This can really have a huge impact on the borrower/s ability to qualify. Please be aware that on Conventional loans here are the general guidelines from Fannie Mae and Freddie Mac:

Fannie Mae:

For all student loans, whether deferred, in forbearance, or in repayment (not deferred), must include a monthly payment in the borrower’s recurring monthly debt obligation when qualifying the borrower. One of the below options below must be used to determine the repayment amount:
- 1% of the outstanding balance; or
- the actual payment that will fully amortize the loan as documented in the credit report, in documentation obtained from the student loan lender, or in documentation supplied by the borrower.
- a calculated payment that will fully amortize the loan(s) based on the documented loan repayment terms; or
- if the repayment terms are unknown, a calculated payment that will fully amortize the loan(s) based on the current prevailing student loan interest rate and the allowable repayment period shown in the table below.

Freddie Mac:

If no monthly payment is reported on a student loan that is deferred or is in forbearance, and there is no documentation in the loan file indicating the proposed monthly payment amount (e.g., the loan verification letter), 1% of the outstanding balance will be considered to be the monthly amount for qualifying purposes.
Examples of documentation of the required payment amount include
- A direct verification obtained from the creditor
- A copy of the installment loan agreement obtained from the Borrower, or
- If payments are currently deferred, the payment amount that will be required once the deferment or forbearance period has ended, as stated in a copy of a financial institution’s student loan certification or the installment loan agreement.

We can use Fannie or Freddie and will evaluate each scenario to use the best route for the borrower/s.

Have a great day/week!

Mike Wickham
Loan ConsultantNMLS: 505614

Caliber Home Loans, Inc.
10022 Lantern Road Suite 600

Fishers, IN 46037

Mobile: 317-260-1563 |Office: 317-576-4115

EFax: 877-673-0432

E-Mail: mike.wickham@caliberhomeloans.com

Apply On-Line @ http://caliberhomeloans.com/mwickham

Download My Smart Phone Application:

http://mikewickham.mortgagemapp.com/

To catch other helpful blog posts, simply go to www.indyschoicerealestate.com. And please keep in mind… “I work harder to make good things happen!” -Bob

Using Wedding Gifts for Downpayment

In times past, newly wed home buyers would be dismayed to learn that they could not use wedding gift money for their cash down payment. I mean, after all, it was their money! But mortgage loan underwriters didn’t quite see it that way. But, alas, it appears that common sense may be creeping into the mortgage process.

Caliber Home Loan’s Mike Wickham tells me that Fannie Mae and Freddie Mac will now buy mortgages where wedding gift money was used for the down payment, provided that some basic documentation is included in the loan file. The docs would take the form of a copy of the wedding certificate or license, and a letter from the borrowers certifying the funds were wedding gifts and that no repayment was expected from the giver.

I’m guessing this might give creative wedding planning a whole new meaning! If you’d like to learn more about how to best prepare to buy a new home, give me a call!

How to juggle selling 1 home and buying another

So you think you want to buy a new home. (But) you’re afraid to sell your current home first because you don’t want to wind up homeless. So, you talk it over and come up with a plan to find the perfect house— and then put your current house on the market. Finally, when it sells you can buy your dream house!

Well, it would be really nice if that strategy actually worked. But alas this is the real world and sorry, but that just ain’t gonna’ happen. No sir-ree! Here’s how things usually play out when you attempt to execute that game plan… You look and look for the perfect house. Finally it comes on the market and you go look at it. You’re not even out of the house and you’re looking at your partner to say “this is it, this is it!” So, you rush around getting your current house ready to put on the market, cleaning it up, decluttering, painting a few walls, buying potted plants and hanging baskets, getting an extra key made. You and your Realtor decide on a price and sign all the paperwork. Now it’s your Realtor’s turn to rush around getting lockboxes installed, the listing entered into the BLC/MLS, ads placed, flyers designed and printed, and a sign in the yard. (And that’s probably an oversimplification for both the seller and the Realtor. But regardless, and despite the best of intentions, it doesn’t usually all get done in 48 hours, if you catch my drift.)

So, the house is now on the market. You want it sold fast but you don’t want to give it away. So you’ve priced it at what you think is fair. Now you need a potential buyer who likes the house a lot (enough to make an offer) and who thinks the price is not fair, but good (in their mind). Maybe that happens the first month, maybe not. And maybe you will need to reduce your price to get the job done. Even if you’re one of those super success stories where you get a full price offer during the first week, you will still have a gauntlet to run.

At this point many will opt to go back to their newfound dream home just to be sure it is, in fact, “the one.” Hopefully, it still is! So, you draw up an offer and your Realtor presents it to the listing agent. Negotiations ensue. You really love this house but you don’t want to pay more than what you think is a good deal! Back and forth the negotiations go. Let’s say things come together and your final counter-offer is accepted. Next on your plate is the home inspection, and possibly another round of negotiations. And besides getting final approval on your mortgage loan, you still must get past the appraisal hurdle. Meanwhile back at the ranch, the person buying your current house is working their way through the same process.

Unfortunately that’s the real world. It ain’t easy and it sure ain’t simple! So what’s a body to do? Not to worry. Despite the complexity of the process, tens of thousands of people buy and sell houses every single day. The system does work. Here’s what you need to do:

Get pre-qualified by a trusted mortgage originator.
Investigate the market just enough to confirm that the type of house you want is available in the areas you’d like to live, and at a price you can afford. (If you have champagne taste and a beer budget, then you will need to get realistic.)
Get your finances in shape (based on directions from the mortgage originator).
Work with your Realtor to develop a marketing plan for your current house (price, condition, updating, decluttering, pets, sign restrictions, whatever).
Complete whatever work is necessary to get your house ready to put on the market.
Put your house on the market— at a price that’ll sell.
Once you do accept an offer, immediately get hustling to find the house you want!
Be confident, stay positive, do what you need to do. Move in to your new home!

To catch other great blog posts, simply go to www.indyschoicerealestate.com. And please keep in mind… “I work harder to make good things happen!” -Bob