mortgage Loans

Non-Conventional Income Sources That Might Assist You To Qualify For A Mortgage

After months of keenly searching for a dream property to purchase, you are lucky enough to have just found it. Unfortunately, there is one issue you hadn’t given much thought – your monthly income is not high enough to effectively cater for the purchase. Simply put, you cannot qualify for your required mortgage loan. Or can you? Yes you probably can. While you combined income might not be high enough to help you qualify for a home loan, why don’t you consider the other streams of income that flow into your home?

From social security payments and dividend income from investments, to monthly alimony payments and disability payments, there are many different sources of income that could be flowing into your home than you ever imagined. However, there are two things you need to first realize before using your other sources of income for mortgage loans qualification purposes, including:

 

• Documentation

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First, you need to document every kind of income you hope to use so as to qualify for a mortgage loan. How so, you might ask. Well, the days of simply stating your income and not having to prove it are long gone. These days, lenders require seeing proof of income a borrower is planning to utilize so as to qualify for a mortgage product.

 

• Total monthly debts

Regardless of what income streams you utilize, lenders today requires that your combined monthly debts, including your estimated new mortgage payments, to be no more than 43% of your gross monthly income. If you are able to meet this threshold, then you can easily qualify for a mortgage loan regardless of whether you are relying on your normal employment income, disability awards, alimony payments, a mixture of rental income, and so forth.

With this in mind, let’s look at some common non-conventional income sources that might actually help you to qualify for a mortgage.

 

Part-time job income

To use this form of income, you must first prove that you have been receiving payments on a regular basis and that you will continue receiving it long after you have been approved for your mortgage. Most of the lenders will need proof that you have been receiving this part-time income for at least two years. In other words, you will require claiming this part-time income on your taxes to proof its authenticity.

 

Rental income

If you have been renting out an apartment, then simply use the monthly rent as a form of income when applying for a mortgage. However, you must be able to show proof of this income, meaning that it must be listed on your yearly income tax returns. This way, the lender can be able to scrutinize your returns and determine whether or not your rental income has been stable for the last two years or so. If not, they your lender might not accept your rental income as qualifying income.

 

Pensions and social security

While you might not think of applying for a mortgage loan after your retirement, some people still do. When they do, they make use of their pension and social security payments as part of their regular monthly income. As long as your pension and social security payments as well as other monthly incomes give you adequate money each month to fall under the 43% threshold, then you have a good chance to qualify for a mortgage loan.

These 5 Tips Will Make Private Mortgage Work For You!

If you are currently contemplating taking out a private mortgage for yourself or someone dear to you, there are five things that can help you make it good for you. These fundamental rules will enable you and your creditor not to crosshairs during its period and always ensure that you are well aware of what requirements are needed.

Getting the contract in writing

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No matter how trustworthy your creditor may be, you should formalize the arrangement even if it’s just one of those intra-family affairs. Whether you choose to do this in the form of a promissory note or other means, you should ensure that you register it together with the title deed with the relevant authorities.

It is critical that you secure the loan with the mortgage deed. By doing this, your lender will take ownership of your property in case some unforeseen tragedy befalls on you: loan default or death. Failure to do this can make the property revert to your other creditors. If this happens, you can risk jeopardizing your family if your creditor decides to legal action.

Setting an interest rate

While you might think that since it is private and should be interest-free, it is best if you are charged an interest. This is because as the borrower, you can be eligible for tax benefits while your lender can be able to beat the rising inflation.

Discussing contingencies

You should also ensure that you and your lender discuss all the pertinent matters conclusively before you receive the loan. This will help avoid conflicts and complications that may arise. You should discuss matters such as:

• What action should be taken when you miss a payment due to personal financial issue?

• What will you do to restructure the loan so as to prevent you from defaulting?

If you are not sure how to go about this, then you can always call on the services of a tax preparer or attorney whom you know. They can help iron out all necessary matters.

Keeping it civil

Relationships at times when doing business can result in conflicts which, if unchecked, can lead to huge problems. Thus, you should ensure that you seek the services of a mediator if necessary when things become sticky in your relationship with your lender. At times, seeking a financial gift arrangement as opposed to a family mortgage can help you avoid some of these complications. It can be unsightly to start arguing of unpaid dues at the family morning breakfast.

Getting credit

Often times, you may have a hard time getting your credit score reviewed with credit bureaus if you opt for a private mortgage. Thus, you should ensure that you send your private mortgage agreement and receipt of the regular payments you have been making to every bureau and request them to them to include this information on your credit history. If they agree, you should be prepared to pay a certain fee which is dependent on their discretion.

Seeking a private mortgage can often be a great way to finance your car or home purchase without having a broker’s pocket some of the funds. Because of this, you should ensure that you assess your interests since it normally affects the ongoing relationship you have with your lender.

Why Are Your Mortgage Applications Declined?

When it comes to mortgage applications most people worry about low credit score. Surprisingly, this is not the only most common reason for mortgage applications to be declined. Here are common reasons why mortgage applications are declined:

Undocumented income

When applying for a mortgage, lenders tend to ask for paycheck stubs, tax returns and bank statements. This helps the lender to see if your income is what you say it is and if it is consistent over the years. If you do not have documents that can prove your income then it gets really difficult for lenders to approve your loan since they are not sure of your financial status. Documented income allows the lender to have confidence in giving you the loan since they are sure you have a consistent income.

Too much debt

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Lenders consider your other debts and they do not want your debts to consume so much of your monthly income. That is why there is a debt-to-income ratio of forty three percent for anyone who is interested in qualifying for a mortgage. Forty three percent debt-to-income ratio means that all your monthly debts, which should include the monthly mortgage payment that is being estimated, should not be more than forty three percent of your monthly gross income. If that percentage increases, then the loan will be rejected. This is because when you have too much debt, then probably is, it might later on become an issue to pay for your mortgage.

Shaky employment background

If you have an inconsistent employment background there is a high probability that lenders will decline your mortgage application. You need to have had a job for at least two years before you apply for a mortgage loan. Lenders prefer dealing with someone who has a consistent monthly income and not someone who moves from one employer to the next. This consistency assures them that your monthly mortgage responsibilities will always be met and by what amount.

A small down payment

You may meet all the required requirements for your mortgage loan to be approved, but the minute you give a small down payment, then you risk the chances of your mortgage being accepted. If you also happen to have a weak credit score or a high debt-to-income ratio then paying a large down payment can increase your chances of qualifying for a loan. A small down payment cannot work either way, ensure your down payment is attractive enough.

Bad credit

Lenders really focus on an applicant’s credit score before they approve a mortgage loan. Lenders always consider a FICO credit score of seven hundred and forty or more for one to be qualified for a mortgage loan. The lower your credit scores the higher the chances that your mortgage application will be declined. The credit score is one hindrance that affects most loan applicants. Ensure your credit scores are according to what the mortgage lenders demand to avoid the risk of your application being rejected.

If you are planning to apply for a mortgage, ensure that you have all the required paperwork and you meet all the required qualifications. Also ensure that you avoid the red flags outlined above and you will not experience your mortgage loan application being declined.

Are You Aware Of This Common Mortgage Mistake?

Your financial statement is probably the greatest source of information for your lender in the event that you are looking to get a mortgage approved. Well, it is the main source of information regarding your financial position. This explains why the lender is very interested in the information presented within your financial statement. Most people assume that the lender only wants to know how much money you have and how regularly you deposit money into your account. The truth is that the lender is interested in the fine details like where the money is from and whether the source is legitimate. This means that you must be able to justify all the monies in your account.

The common mistake

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After establishing that you need a certain amount of money in your account in order to apply for a mortgage, you may be tempted to borrow money or acquire it from other sources like family, friends or another job that is not a part of your main source of income. This is not entirely a bad thing. It is however considered a mistake because the lender will need you to verify the source of the income depending on how much it is. There often is a cause for concern when the money in question is more than 25% of your regular income.

You need to not only explain where the money is from but also provide supporting documentation that will assure the lenders of the source of that money. The main idea here is to be able to explain your financial situation to the finest of details, in order to avoid surprises. The lender would not want you borrowing money to impress them, since they need to fully understand your financial situation before they can pay for your house.

Expected outcomes

If you happen to have some deposits in your account that cannot be explained or documented effectively, your whole application will be credibly delayed. Here, you would like to remember that delays do not favor you in any way seeing as you will be incurring extra costs while also letting lucrative house deals pass you by. You need to ensure that you have all the documentation to explain the money that has been gifted to you, money that you have earned from a side hustle and any other deposit made to your account that can be seen as irregular based on your existing banking patterns.

Sometimes you may have everything in order with your mortgage application except for a few deposits in your account. Even with an impressive credit rating and a stellar pre-qualification, you will not be approved for the mortgage unless you clear up the suspicious deposits. Be sure to have a transparent financial statement with the required explanation and documentation in case you have deposits that can be considered as out of your regular banking pattern. This is the only way to avoid the unnecessary costs that come with the delays in processing a mortgage when your account has irregular deposits. Feel free to speak to us if you have any questions regarding mortgages.

FOR BETTER RATES THAN A BANK!

For every need:

                The economic situation throughout the whole world has taken a totally new turn that was never expected and those experts who forecasted the economic changes were left speechless when it all happened overnight and in an unprecedented manner. Starting in the year 2008, there were dramatic changes in the spending habits of individuals especially among the American citizens which showed a totally different face of America never seen before and can be witnessed even today. It would be hard to believe that many of them are changing their spending habits and are working towards a frugal lifestyle which many advocate as well. The hard economic times have brought in several changes which are focused towards saving money and finding ways by which the spending that they make became lesser and lesser. Many financial consultants would advice the right ways not just to invest their hard earned money but also take measures while borrowing money by suggesting financial sources with cheaper rates of interest while taking loans for various purposes.

Consult them!

                When you are so decided about your purchasing a house or any other asset and have been pondering over a financial loan and not getting the right answers in your head for a long time, the right place to get consult would be the Montreal mortgage brokers who are specializing in this area of financial services and they offer the right advice and suggest the right source of finance for all your financial needs for now and for the future. It is well known that the services industry is growing leaps and bounds and has been including many new and innovative service products which encompass many major areas of business, health and financial undertakings.

How do they do it?

                The explanation for a financial service which deals with mortgage broking is easily understood as they are not the actual source of finance nor do they endorse a particular financial company. They have links with major mortgage providers and they offer consultancy to those who are in need of a financial product. They may or may not be linked with a financial company but do not work for them directly. Their major role is to bring the two sides of the table facing each other and the deals are signed according to the likes and preferences of the agreeing parties. Those who are in need of finance can register with the consultant or brokerage firm as they are normally called and they will make sure that they find you the right type of financial firm that will be suitable for your kind of financial product.

The rates:

                The financial consultant takes you as his client once you register with them and the  rest is their job to find the right firm for you and in this search, they have to be in touch with many financial service providers and the leads into this becomes a worthwhile aspect of the whole process. Some firms offer loans for mortgage for rates which are so attractive that even some of the banks cannot offer and this makes them one of a kind. It is the duty of the mortgage broker to find one such service for the clients.

Special features:

                There are many special features of the broker which would help you to be in good faith with them such as having vast knowledge about the players in the field and apart from that they have knowhow about the niches they deal in and Montreal mortgage brokers would definitely bring you to the table of one such worthy financial service provider suitable to your needs.