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Home Ownership Seems Unattainable


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More of vent, but how can anyone achieve home ownership? I am a seasoned sales professional. I have worked in sales making base+commission for well over 10 years, no gaps in income, no unemployment. I am more stable than someone who bounces jobs every 6 months just making a regular hourly pay, yet I can't get a loan because I am being told that since I changed jobs end of 2019 I need to wait yet again two years. My school loans are in forebarence but even still the lender wants to use 1% against my debt, my loans are 70k so thats $700 a month! I pay all my bills on time, never a late payment on my car loan or any of my credit cards. Never evicted in my life, I have rented since I was 18 and now in my mid 40's. I have a family with kids, my landlord is booting us to sell this house and in my area there is a .5 vacancy rate, it is a battle for any rentals. I made 80k last year and on track to make over 100k this year. I am W2...I am not sure what to do, I am seriously stressed out. I need a home or a co-signer temporarily to buy. I get tired of all the realtor posts on social media saying, "why rent when you can buy, interest rates are low " I would love to buy but seems to be out of reach for us! I wish lenders would take an overall picture of someone rather than if they fit the square boxes! I am stable I just want someone to have some faith in me. Any advice or help is welcome. Thanks!

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I would look at some of the smaller mortgage brokers. Everything you described- job change, deferred student loans, etc.. I have seen clients get loans under all those scenarios. Each mortgage company has their own underwriting standards and you need to keep trying until you find a match.

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People change jobs all the time.  

 

People move across the country to take new jobs, and buy homes to live in as soon as they arrive.

 

Where have you been mortgage shopping? 

 

Separately, the student loan debt is debt.  Why wouldn't that factor into your capacity for mortgage repayment?  

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If you are in a field where commissions are a set part of the compensation package, many mortgage brokers will allow you to count them even if you haven't been at your current employer for two years, especially if it is in the same field/industry (for example you moved from selling cars at Honda to Toyota).  You need to take the emotion out of this and figure out where the roadblocks are occurring.

 

Why do you think you can't get a loan?  What have the lenders told you?  Have you tried mortgage brokers, they tend to push hard to get results because that is how they are paid.  You mention your income and the student loan debt holding you back, which makes me think your issue is DTI.  Do you have other debts as well like credit card debts and car loans?  So you have two options, either make more or spend less.  Does your spouse work?  If not, can they?  If making more isn't an option you need to really cut back your unnecessary expenses to get the debt paid down.  If you are making even $80K/year and your only debt is the student loans you should be able to find a house unless you live in a super high cost of living area. 

 

Hard to give any specific advice without more details...

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  • 2 weeks later...
On 3/28/2021 at 10:31 AM, Aliken said:

More of vent, but how can anyone achieve home ownership? I am a seasoned sales professional. I have worked in sales making base+commission for well over 10 years, no gaps in income, no unemployment. I am more stable than someone who bounces jobs every 6 months just making a regular hourly pay, yet I can't get a loan because I am being told that since I changed jobs end of 2019 I need to wait yet again two years. My school loans are in forebarence but even still the lender wants to use 1% against my debt, my loans are 70k so thats $700 a month! I pay all my bills on time, never a late payment on my car loan or any of my credit cards. Never evicted in my life, I have rented since I was 18 and now in my mid 40's. I have a family with kids, my landlord is booting us to sell this house and in my area there is a .5 vacancy rate, it is a battle for any rentals. I made 80k last year and on track to make over 100k this year. I am W2...I am not sure what to do, I am seriously stressed out. I need a home or a co-signer temporarily to buy. I get tired of all the realtor posts on social media saying, "why rent when you can buy, interest rates are low " I would love to buy but seems to be out of reach for us! I wish lenders would take an overall picture of someone rather than if they fit the square boxes! I am stable I just want someone to have some faith in me. Any advice or help is welcome. Thanks!

 

get your loans OUT of forbearance by doing an income-based repayment plan.  Lenders can use a w2 ONLY approval for conventional loan.  I have $450k+ in loans.  Thats a 4500 month payment.  Who can afford that?  Also, look for a bank statement loan.  Rate might be higher, but it would help to get you in the door.

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What kind of student loans do you have? If they are direct loans, you don't need to take them out of forbearance--giving up 0% interest through September is crazy.  Are you on an income based repayment plan? If so, there are many lenders that will use your IDR payment instead of 0.5 or 1%. If you're not on an IDR plan, you should explore that option. I closed on a house in December with 254k in student loans in forbearance--I did provide evidence of my IDR payment and my PSLF status. It was conventional with 20% down. I used a bank and had a back up just in case (advice from creditboards).

 

I have no advice on your employment status. I've always heard lenders want 2 years with the same employer but will look at the same type of employment if less. My future daughter-in-law was with her employer only one year but was in the same industry as her previous job. My son has ~130k in undergrad and law school loans. He is on IDR pursuing PSLF working for the state. They closed March 2020 with no issues--conventional with 20% down and used a broker for a very smooth process.

 

Which brokers/bankers have you tried and what was their specific feedback?

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  • 2 months later...

Find a mortgage broker that also represents individual investors. The rate may be higher, i actually refi-ed with one.

 

This includes options such as Owner-Land/Lot financing and you purchasing a suitable home and move it there e.g. Boxabyl

Edited by ThomasRMorrison
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My FICO mortgage scores were all over 795. No negatives. Minimal debt other than the student loans and a thick file. I did have to spend some time explaining how PSLF works to my banker and I wasn't always sure it was relayed to the underwriter exactly the way it was intended but after some early stumbles, everything went very smoothly.

 

As I mentioned previously, I also had a back-up preapproval just in case...

 

Coming out of CARES forbearance wasn't even on the table for me. There was no way was I going to pay interest on a balance that was on the cusp of being forgiven. 

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FHA is starting to make some changes on how the calculate student loans-

Hot of the press…The Federal Housing Administration (FHA) has announced updates to its student loan monthly payment calculations to take steps to remove barriers and provide more access to affordable single family FHA-insured mortgage financing for creditworthy individuals with student loan debt.

This is big news for your clients, this updated policy aligns FHA student loan debt calculation with the other agencies, helping to streamline and simplify for borrowers with student loan debt obligations.

The updated guideline reads as follows:
For outstanding student loans, regardless of payment status, the Mortgagee must use:

  • The payment amount reported on the credit report or the actual documented payment, when the amount is above zero; or
  • 0.5% of the outstanding loan balance, when the monthly payment reported on the credit report is zero.

To learn more: https://www.hud.gov/press/press_releases_media_advisories/HUD_No_21_103

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Late to this game but, yeah, rules on discretionary income (commissions/bonus) suck.  And I don't think there's any way around them (in my limited experience).  I'm retired, but my wife started a new job that required that we relocate.  Her annual bonus is 30% of her compensation and a key part of our annual income.  Despite having been in her previous job for 8 years with a consistent bonus history, the mortgage lender stated that they could only factor bonus compensation in her new job once two years of bonus payments had been established.

 

Buying a home in a pricey region, and looking to qualify for the purchase in advance of the sale of our existing home, the consequence of the income exclusion blew our debt ratio out to just shy of 50%.  We were very fortunate that the lender (Digital CU) had a loan program under which other credit criteria qualified us to qualify for a mortgage with that high of a debt ratio, without any adverse impact to the mortgage rate itself.  There were some tense moments as we waited for that to play out.

 

All I can suggest is that you cycle through 3 or 4 reputable mortgage companies to see if you can find one that is able to circumvent any income and expense obstacles.  Mortgage brokers are another effective avenue, although I'm somewhat averse, having closed  first mortgage through one and having suffered unpleasant fee surprises at closing (which largely worked themselves out, but I had to threaten to walk for the issuer and broker to have sufficient motivation to reverse the fees).  Having noted that, mortgage brokers know their pool of lenders well.  Presented with a specific issue that's tripping you up, they may be able to knowledgeably steer you to a lender who's best in the position to navigate through that issue.

 

Since I mention DCU, they're worth consideration as a potential lender, But be advised that they can be IMMENSELY frustrating to work with.  The front line reps are fairly clueless and, unless you successfully get in the face of a manager, it's possible that your tolerance for frustration may easily be surpassed.

 

 

 

 

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