Your Questions About Mortgage Loans

Sandy asks…

can I get a mortgage loan/refinance a house that I bought with a personal line of credit?

Want to buy a house with a personal line of credit(House is only $15,000). Do not qualify for mortgage loan yet, since just starting new job. I think our bank will be more than willing to give us line of credit, but wondering if I can then(when I do qualify for mortgage loan) finance/refinance it to a mortgage loan? Hope that makes sense!

John answers:

It is possible……I purchased a fixer-up house with a personal loan. Fixed it up and flipped it within 60 days. Just depends on your creditworthiness and your relationship with the bank. The bank didn’t even ask why I wanted the money.

But I had the assets to cover way over the amount I was borrowing.

Sandra asks…

How does your employment history affect whether you get approved for a mortgage loan?

I have been at my current job for 3 years as a collector for a major corporation. I just graduated and got my bachelors in psychology. I got offered a job related to my degree, the pay is better that what I am currently making.

I live in Arizona

I want to purchase a home soon within the next 3-4months, if I accept this new job, will it affect the possibility of being approved for a mortgage loan?

John answers:

For strict underwriting purposes, VA and FHA loans need one month worth of stubs, conventional auditers need 60 days (2 months).

As far as income risk, the longer is better but having no gaps in employment and going for a job that is making more is ok. Depending on how you decide to purchase your home – you can ask your lender about your situation prior to filling out paperwork.

Good luck on your home purchase!

Jenny asks…

What would prevent a bank releasing a mortgage loan?

My loan has been approved the valuation has been carried out. I have recently got (since been approved) a £3500 unsecured loan for a car. I exchanged contracts a week ago, completion is in 2 weeks. Could this jeopardise getting the mortgage loan, my friend says the may do a credit check before releasing the money. Feeling both stupid and worried. I am based in England.

John answers:

Your solicitor will not have let you exchange contracts without a binding mortgage offer, which you will have formally accepted at the same time as exchanging contracts. So your mortgage is absolutely certain. The lender will have already done all the credit checks they need and nothing of that sort can affect the loan now.

Mortgages last for 25 years, so its obvious that you are going to have other loans and debts during that period, and the mortgage lender is fully aware of this. Its just that in your case you have taken out another loan very quickly.

Having said that, if the the mortgage lender thinks you lied to them about your circumstances you might have a problem – but I assume that you can easily prove that you didn’t start thinking about the new loan until after the mortgage was agreed?

And if you did not mention the mortgage (if asked) when applying for the new loan you may be in breach of those terms.

Nancy asks…

Can i get a Mortgage loan as an independent contractor and with less than 2 years in business?

Is there any possible way that i could get approve for a mortgage loan in the state of NY as an independent contractor and with less than 2 years in business?

I also want to mention that I have high income and excellent credit.
I’m interested in a house that costs between 100-200 thousand dollars, I can put between 5-15% down. A mortgage loan officer from CapitalOne bank told me that I can’t be approved because there is a rule that requires independent contractor to be at least two years in business before applying for a home loan. But I’m still looking for a second opinion.

John answers:

A little more detail would be needed. Conventional or Government? Conforming, jumbo, non-conforming? 20% down or MI required? On a standard 20% down conventional product, FNMA will allow less than 2 years s/e income with compensating factors ( like you mention good credit, low debt to income ratios). But you must document at least 12 months of s/e income for the income to be considered. 2 years documented income is required so your previous employment will also have to be disclosed / documented. You can also access FNMA guidelines on Efanniemae.com. While not all banks / lenders follow FNMA, it can give you an idea and possibly give some guidance on other questions that may come up.

Daniel asks…

How much will a cosigner improve my chances of getting a mortgage loan?

My current credit score is low(in the very poor to poor range), but i’m working on paying off my debts and improving my credit-worthy reputation. I plan on getting a secured credit card in the near future as well. I’m aware that my credit is not good enough to get pre-approved or actually approved for a mortgage loan b/c quite honestly I’m not ready for that kind of financial commitment at this moment. I do however, have a willing cosigner with a moderate income and a beautiful credit score who will sign when I do decide to make that commitment.

My question is what kind of credit score will I need for pre-approval or actual approval with a cosigner? I was thinking minimal 620’s? But I feel like I’d need that score for pre-approval anyways, so is a cosigner really THAT much help in these situations?

Thank you.

John answers:

If you were borderline it will help. Your score is at the bottom. A mortgage can run 20-30 years, asking someone to cosign for that length of time is a major commitment for both of you. Don’t expect it to be a big boost unless that person has the income to support the payments should it be needed. A bank probably won’t approve it until they feel YOUR situation is going to improve soon.

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