[Angela]

Underwriters also examine the borrower’s obligation period, which may include payments such as child support and alimony. This will focus on the supporting documents for child support obligations and the payment time frame. These are the processes that underwriters follow in the case of a default mortgage loan.

How Far Back Do Mortgage Underwriters Need to See Child Support Payment History?

Typical Review Period: According to the mortgage underwriters’ requirements, a child support payment history is, on average, more than 3 to 12 months. The time frame can be affected by the type of loan issued, the issuing lender, and the borrower’s financial abilities.

How do Underwriters Examine The Fraudulent Child Support Payment History?

Verification of Payments: Underwriters commonly need collateralizing papers to confirm the production of the child support payment. Collected evidence may include:

Bank Statements: Were there any child support payments made to the account?

Court orders or court agreements: Paperwork establishing the terms of child support.

Payment Records: Of the concerned child support enforcement agency, if any.

Regularity of Payments: Evidence detailing maintenance of receipts and evidence of on-time payment schedules is required. Late or no payments are a concern with the risk of loss of income.

Agency Mortgage Guidelines with Focus on Child Support Payment History:

(HUD FHA Loans):

History Required: The FHA almost always requires the borrower to show at least 3-6 months of child support payments. However, it is possible to request a much longer history relative to their financial situation.

Documentation: The borrower needs to submit paperwork confirming that child support payment income is received regularly or is anticipated to be received for at least three years.

VA Loans: History Required:

VA also generally states that the borrower must have received child support for at least six months.

Documentation: The underwriters expect the courts to document the obligation of child support payments, such as child support orders and their enclosure in the income. This income must be maintainable for approximately three years.

USDA Loans

History Required: A 6-month payment history is required for USDA loans.

Documentation: Like all loan types, the borrower is required to provide evidence that the support payments are received on time through bank deposits or child support enforcement agency records. The income should last for up to three years.

Fannie Mae (Conventional Loans)

History Required: Fannie Mae posts a norm of about six months and warrants around twelve months of child support payment history.

Documentation: The child support widower will need to produce evidence that the child support payments are not irregular and that such payments will last for at least three years. This will require documentation such as payment receipts, child support enforcement agency records, or bank statements.

Freddie Mac (Conventional Loans)

History Required: Freddie Mac tends to want child support payment history to be substantiated for at least six months.

Documentation: Likewise, Fannie Mae requires evidence of income generated from durable payments over three years, such as a track record of deposits or records of the child support agency.

Jumbo Loans

History Required: Old collections are especially common in jumbo loans, which tend to have a very stiff requirement regarding the child support payment history required by the underwriters.

Documentation: Mortgage lenders need extensive documentation. This may include, but is not limited to, child support court orders, payment records, and bank statements, among others, showing how the borrower’s income will be stable for three or more years.

Non-QM Loans:

History Required: Although non-QM (Non-Qualified Mortgage) loans may prove lenient, most underwriters require six to twelve months of child support payment history.

Documentation: Along the same lines, adequate evidence of the income category of child support payments must be provided. This includes, but is not limited to, court orders and bank statements.

Summary of Requirements by Loan Type

HUD (FHA Loans): 3 to 6 months of history for qualification criteria, income must be sustainable for a period of 3 years.

VA Loans: 6 months of history, and income must be sustainable for three years.

USDA Loans: 6 months of history and must sustain three-year income.

Fannie Mae (Conventional Loans): 6 to 12 months of history and income must be sustainable for three years.

Freddie Mac (Conventional Loans): 6 months of history and must sustain income for three years.

Jumbo Loans: 12 months of history and income must be sustained for three years.

Non-QM Loans: 6 to 12 months of history, depending on the lender’s discretion.

Underwriters concentrate on the likelihood of being presented with verified and consistent child maintenance income, guaranteeing that it will remain the same within the foreseeable future. Concise, complete, and well–organized documentation will make the underwriting process smoother and your application stronger.

Please feel free to ask if you need more detailed information or specific advice!

[Angela]

The following are the clarifications regarding your questions about FHA loans and employment rules. Here are the answers to your questions regarding FHA loans and employment rules:

Is the Home Purchase Agreement Void if the Current Employment is the Basis of the FHA Pre-Approval and the Buyer Has 6 Months of Employment within 50 Days after the date of the Pre-Approval Letter?

Home Purchase Agreement: Whether the purchase agreement is void depends on its specific terms and local laws. If the pre-approval was contingent on certain employment criteria not being met, the seller may have a right to void the contract, but this will depend on the contingencies allowed for in the agreement. It would be prudent to seek the advice of a real estate lawyer or agent to understand the legal implications of the contract in question.

What is the FHA 6-Month Employment Rule?

Employment History: FHA is not as stringent as banks and has no specific “6-month employment rule.” Rather, the FHA usually looks for a stable employment record for the last two years. Still, if one has just joined new employment, typically in the case of stables, recent changes are permitted toward variances to the employment record.

401k Type: However, other factors can be used when the borrower’s credit should not be compromised. For the other types of retirement plans, the finances can be utilized after a few years since the employers also provide some money to the employee’s account.

What Are The Combinations Of FHA Loans?

Compounding of FHA Loans: When said that an FHA loan may not entitle the borrower to continuous loans, it does not mean he would be left defenseless. Lowering the normal debt ratio allows for compliance with the cost of an active market position.

Which Forms of Employment are Preferred by FHA Loan Providers?

FHA Loan Employment, Employment which the borrower has to possess: The FHA’s employment objectives must include a wage-earning career irrespective of the trophy-achieving need. FHA borrowers can rely on more than one salary as the primary source of performance since their clusters are broader than the average.

What is the Final Verification of Employment for FHA Loans?

Final Verification: Just around or concomitantly with the completion date, correct FHA lenders obtain a Final Verification of Employment (VOE), usually done by the lenders within ten days of closure. It confirms to the lender whether the debtor is still employed and whether or not there have been material changes in his employment and income since the time of application.

Can You Use an Offer Letter for an FHA Loan?

Offer Letter: An offer letter can be used to apply for FHA financing to provide employment requirements for the borrower who has yet to commence a new job. Nonetheless, the general tendency with a lender is to require them to take up that job prior to the closure or provide proof that the job offer is genuine and the earnings will be forthcoming.

What are the Requirements for an FHA Employment Contract?

Employment Contract: If the borrower uses an employment contract (or offer letter) to qualify, it must be non-contingent, and the employment terms, including the salary and start date, must be clearly indicated in the contract. Such lenders may also require the borrower to have gone to or will go to the job within 60 days after the closing.

How Does One Verify Employment with the FHA? What Are Its Rules regarding Employment Verification?

VOE Requirements: Every borrower must verify their employment with the lender, mainly for FHA. Normally, this includes Current Employment: A verbal or written verification call may be made to the employer to verify the borrower’s job position, earned income, and other aspects, such as the probability of him being retained by the company.

Employment History: Verify the past two years of employment, including layoffs and occupational variations.

Self-Employment: If the borrower is self-employed, documentation of that nature, such as self-tax returns, will be solicited.

Summary Home Purchase Agreement: If a borrower uses the pre-approval based on employment, it does not mean the employment might be rendered void.

FHA Occupancy Rules: Employment for at least two years, except for recent job transitions where current earnings are steady.

Seasonal Income: Under one fiscal year, the declaration is permissible, subject to a repayment history of at least two years.

Offer Letters: Leveraged cannot be taken in. The standard provisions are common and mandate employment to commence before closing.

Verification of Employment: This is done within ten days of the closing date to ascertain that the employment is sustained.

If there is something in particular that you wish to know or require more information about, please do not hesitate to ask!

[Angela]

Yes, obtaining an FHA mortgage during an active Chapter 13 bankruptcy is possible, even if you have another bankruptcy from years prior. Here’s a breakdown of the key points related to obtaining an FHA mortgage during and after Chapter 13 bankruptcy:

Obtaining an FHA Mortgage During Active Chapter 13 Bankruptcy

Eligibility: You can apply for an FHA loan while still in an active Chapter 13 bankruptcy, but you must meet specific conditions:

• Court Approval: You need approval from the bankruptcy court to take on new debt, including a mortgage.
• Payment History: You must have made on-time payments for at least 12 months on your Chapter 13 repayment plan.
• Manual Underwriting: Your loan will likely undergo manual underwriting, in which the underwriter assesses your overall financial situation more closely.

Obtaining an FHA Mortgage After Chapter 13 Bankruptcy

Timing: You can apply for an FHA mortgage once your Chapter 13 bankruptcy is discharged. Unlike Chapter 7, which requires a waiting period, FHA guidelines allow for loan approval immediately after discharge:

• Discharge: You can apply immediately after discharge without a waiting period.
• Dismissal: If your Chapter 13 bankruptcy was dismissed (not completed), a 2-year waiting period typically applies before you can qualify for an FHA loan.

FHA and Multiple Bankruptcies

Multiple Bankruptcies: FHA does allow for individuals with multiple bankruptcies to qualify for a loan, but there are specific guidelines:

• Subsequent Bankruptcies: If you have had more than one bankruptcy, especially within a short timeframe, you may face additional scrutiny from the lender.
• Underwriting Considerations: The underwriter will consider the reasons for multiple bankruptcies, your current financial stability, and your ability to make mortgage payments.

Can You Get a Mortgage After Chapter 13 Bankruptcy?

• Yes: After completing a Chapter 13 repayment plan and receiving a discharge, you can qualify for an FHA mortgage. This is possible immediately after discharge if all other FHA requirements are met.
• Financial Stability: The key to approval is demonstrating financial stability and a solid repayment history during and after bankruptcy.

Can You Get a Loan While in Chapter 13?

• Court Permission Required: To get any type of loan, including a mortgage, during an active Chapter 13 bankruptcy, you must obtain permission from the bankruptcy court.
• Loan Approval: Lenders will typically require at least 12 months of on-time payments on your Chapter 13 plan, and the loan will likely need to be manually underwritten.

Summary

FHA loans are possible both during and after Chapter 13 bankruptcy.

Court approval and a solid payment history are crucial during an active Chapter 13.

No waiting period is required after a Chapter 13 discharge to apply for an FHA loan.

HUD, the parent of FHA, allows for multiple bankruptcies, but the circumstances and financial recovery will be thoroughly evaluated.

Feel free to ask if you have additional questions or need further clarification!

[Angela]

Writing a letter of explanation (LOE) for mortgage underwriters is often integral to seeking a mortgage. Such a letter explains or provides more info on some dubious concerns the underwriter might have about the applicant’s finances or credit. Here’s a step-by-step guide on how to write an effective letter of explanation:

Step-by-Step Instructions for Writing a Letter of

Explanation:

Understand the Purpose:

Reason for the Letter:

• Consider why the underwriter requests an explanation.
• Most common gaps include employment, missing payments, additional inquiries and latest credit disbursements, sudden money deposits, or discrepancies in the credit history report.

Specific Issues:

• Be specific on the issues that are bothering the underwriter.

Use a Professional Format

Your Information:

• Please include your full name, address, phone number, and email at the top of the letter.

Date: When you are writing, remember to add the Date.

Lender’s Information:

• Then, add the lender’s name, the loan officer’s name, and the lender’s address.

Subject Line:

• Keep It Specific, Say For Example, I Need a Letter of Explanation for [Specific Issue].

Start With a Formal Salutation:

• Target the letter to the loan officer or underwriter by name where possible.
• Otherwise, put To Whom It May Concern without a name.

Describe the Issue in Detail:

Brief and Honest:

• Briefly describe the event or situation in the opening sentence.
• It is permitted to be frank and forward.

Details:

• Give the details of the occurrence or the situation.
• For instance, if a delay in payment was caused, the Date, the amount, and the reason can be stated.

Context:

• Provide the underwriter with relevant context that may help.
• Refrain from making excuses.
• However, it presents relevant information that addresses the issue.

Support the Explanation with Documents:

Reference Documents:

• Any other documents that can substantiate the explanation should be stated in the letter.
• For instance, if you are explaining a large deposit, provide the bank statement or other documents that provide the source of the funds.

Attach Documents:

• Attach additional supporting documents along with your cover letter.
• Ensure these documents are well arranged and labeled appropriately to facilitate sorting.

Present Steps for Resolution (If Relevant)

Steps Taken:

• If the problem has been rectified, specify what procedures you undertook to achieve this.
• For instance, if you have due payments, highlight that you have arranged auto–debit facilities to avoid such situations again.

Current Status:

• Comment on the applicant’s financial situation and the changes since the problem arose to assume the underwriter’s fears.

Make the Warmest Ending of the Letter

Commitment to the Underwriter:

• Finally, thank the underwriter again for showing appreciation and restating their desire to complete the mortgage.

Contact Information:

• I will also be willing to provide more details as may be required and provide the contact information again.

Proofreading and editing

Review:

• The letter should be reviewed thoroughly to ensure that it is free of spelling or grammatical errors and that its contents are coherent.

Professional Tone:

• The writer must ensure the letter is formatted and has a respectful tone.

Finalize the letter

Signature:

• The last thing the writer does is the letter’s conclusion, such as “Sincerely yours always works best” or “Best.”
• If it is a handwritten letter, a handwritten signature may follow the subject’s name.
• A typed version is next.

Letter of Explanation Sample

[Your Name]

[Your Address]

[City, ST ZIP Code]

[Telephone Number]

[Email Address]

[Date]

[Lender’s Name]

[Loan officer Name]

[Lender’s Address]

[City, ST ZIP Code]

Slug: Letter of explanation regarding [Specific Issue: e.g. L…”

Dear [Name of Loan Officer or Underwriter]]

• This letter is to explain [the explainer’s purpose for that specific issue, e.g., an explanation for filing late payment on my credit report, January 2024].
• The bill was paid after the due Date.
• This is because of
• [Briefly write why the payment was made late, e.g., a surgery for which I was emotionally unprepared to bear any expenses].
• I am safe and sober and have made the following [list of steps taken. I have arranged standing orders to pay all my due bills.].
• The following documents were attached supporting the above letter:
• [Document One, e.g., Monthly statement from the bank of January 2024].
• [Document Two: e.g., medical bills, etc.].
• I am sorry for any inconvenience this matter may have caused and am grateful for your help.
• Please get in touch with me if you need more information.
• I appreciate the time and effort you have devoted to me.

Yours,

[Your signature as applicable]

[Your name]

Certainly, understanding your position will help you compose a properly and accurately articulated letter of explanation in case the mortgage underwriter requires one.

[Angela]

Yeah, it is possible for a person with a credit rating between five hundred and six hundred points and receiving regular payments to get their refinancing approved. It can be not easy, though. Nevertheless, whether the loan type, loan-to-value ratio, or debt-to-income ratio will allow approval for refinancing depends on other factors. There are several loans for people with low credit scores. Non-Qualified mortgage (non-QM) loans, Federal Housing Administration (FHA) loans, or specific types of refinance programs may work in this case. These loans usually have higher interest rates and stricter requirements than others. You should find a lender specializing in giving out loans to people with low credit ratings if you want better chances of getting approved. Mortgage rates are mainly based on the borrower’s credit scores. 500 to 600 credit score borrowers can get approved for a refinance or cash-out refinance, but the probability of paying points and getting a higher rate is likely. I suggest homeowners who plan on refinancing to maximize their credit scores. You can contact us if you need a few pointers on how to boost your credit scores fast at Gustan Cho Associates.

[Angela]

Credit fixes can work, but their success depends on the case. Credit repair companies that are legal could assist individuals in correcting their credit ratings by challenging inaccuracies in the credit report, bargaining with lenders, or sharing tips for boosting one’s credit score. Nevertheless, they should not be able to eliminate true negative information or promise any definite increment in a person’s overall points. Additionally, it is possible to carry out this activity without spending a dime if you contact credit bureaus yourself. Also, watch out for cheats and “instantaneous” cures because they usually bring nothing else but sadness.

[Angela]

Yes, landlords often conduct credit checks as part of the tenant screening process. A credit check can tell landlords whether or not someone is financially responsible enough to pay rent on time every month. Here are some things you should know about having your credit checked when applying for an apartment:

Why Landlords Run Credit Checks:

Showing Financial Responsibility: Your credit history gives property owners a quick overview of how well you handled money in the past. This includes looking at your credit score, debt amounts owed, payment history, and whether there were any late payments or accounts sent to collections.

Risk Evaluation: They want to know if it’s likely that they’ll receive consistent payments from their tenants – and this can be determined by checking over someone’s credit report. When people have demonstrated financial stability through high scores, this means never missing bill deadlines or loan repayments. Landlords see them as less risky renters.

What They Look for In A Credit Check:

Credit Score: The required range may differ among various establishments. However, generally, most places expect an applicant’s scorecard number showing responsible money management habits to read above 620 points. However, other thresholds could exist depending on individual companies’ policies.

Payment History: Property managers also evaluate whether people pay their bills on time, so they examine records like credit cards, loans, and previous rent payments.

Debt-To-Income Ratio (DTI): These figures may be compared since some property owners want assurance that after satisfying all financial requirements, including settling debts, they can still pay rent regularly without defaulting.

Negative Marks: Instances such as bankruptcy declarations, foreclosures, collections accounts, and charge-off records might raise eyebrows because these indicate possible riskiness according to potential lessors.

How Credit Checks Work:

Consent: Your agreement must be obtained first to legally perform a credit check, so once you sign the application form granting permission for them to request it, they have every right.

Soft vs. Hard Inquiry: A tenant’s credit check is considered a soft inquiry that does not affect one’s credit score. However, there are instances where the owner may use services that involve hard inquiries, which slightly impact one’s credit rating.

Other Tenant Screening Methods:

No Credit/Bad Credit: Lack of credit history or poor ratings only sometimes disqualifies applicants from being eligible for renting houses. In some cases, landlords can still consider other factors like steady income proof, references, or higher deposit amounts.

Having A Co-Signer: If a person’s creditworthiness is questionable according to the checks carried out by lessors, having someone with good numbers cosign lease agreements can provide additional security.

What You Can Do About It:

Review Your Report: Before sending applications, review the reports to ensure accuracy and address any discrepancies.

Openness Helps: When there are issues with one’s record, it is important to be transparent from the start. Talk about bad items, but balance those with good things, too. Examples include stable earnings over time or a great rental history. Timely payments on their financial obligations prove financial responsibility when dealing with financial obligations.

Building Credit: If there is ample time before application submission, try working towards enhancing scores by paying off more debts faster. This ensures timely settlement of all bills without attracting new inquiries into one’s financial stability.

In Summary:

Running a personal finance background check on potential tenants is a standard property management practice. Knowing what they look for in these inspections will help you prepare accordingly. Therefore, it increases your chances of securing rental housing establishments within your desired locations.

If anything still needs to be clarified, feel free to ask questions!

[Angela]

Indeed, it is possible to buy a foreclosed home with an FHA loan. However, some considerations need to be taken into account:

Property Condition:

The property must meet the minimum property standards set by the Federal Housing Administration (FHA). This means the house must be in a habitable state. Safe, secure, and structurally sound. If it doesn’t meet this criterion due to its poor condition, it might have to undergo repairs before becoming eligible for FHA financing.

Consider applying for an FHA 203(k) loan if substantial repair work is required. These loans allow financing of both the purchase price and renovation costs.

Appraisal Requirements:

A HUD-approved appraiser will evaluate whether or not the estate complies with HUD’s minimum standards. Should it fail to do so, the seller (who might be a bank) could be asked by the appraiser or yourself through an FHA 203(k) loan, again covering repair expenses.

Offer Process:

Compared with regular residential purchases, buying foreclosures can involve more complex procedures. Frequently they are sold on an ‘as-is’ basis, i.e., without any repairs done by the seller (often banks or government agencies like Fannie Mae). You must also remember this when making your bid and arranging for funding.

Government-Owned Foreclosures:

Government-owned properties, such as those belonging to the Housing and Urban Development Department (HUD), can also be bought using FHA loans. These houses were originally financed through this program before being repossessed following default on mortgage payments, etcetera.

Loan Limits:

Ensure that what you pay falls within what’s allowed under FHA lending guidelines applicable where you intend buying, including nearby counties, if need be. Since limits differ from one county area to another based on local real estate market conditions prevailing at the purchase agreement execution date, etcetera.

Down Payment:

Ordinarily, FHA loans require a minimum 3.5% down payment. However, credit score requirements must be satisfied before becoming eligible for this low-down payment facility.

Acquiring a foreclosed property using an FHA loan is possible. However, certain criteria must still be met, and the process could involve more steps, such as repairs and appraisals. If significant repair work is required on such houses, consider taking up an FHA 203(k) loan.

[Angela]

A jumbo mortgage’s lowest down payment can change between lenders, the borrower’s money-related outline, and the loan program. Regardless, some rules should be followed:

Typical Minimum Down Payment:

Generally speaking, most creditors require at least 10-20% of the total amount as a down payment for a jumbo mortgage. The accurate percentage may often depend on factors such as credit score, debt-to-income ratio, and loan size.

Lower Down Payment Options:

Nevertheless, several banks can provide lower down payments for jumbo mortgages, like 5%- 10%. However, these usually involve stricter qualifications, higher interest rates, or extra insurance requirements.

Higher Down Payment Scenarios:

Suppose somebody has a weaker financial profile, e.g., a lower credit score or higher debt-to-income ratio. In that case, to compensate for their risk, lenders may ask for over 20% of funds as a security measure.

While shopping around, one should compare diverse lenders because requirements for jumbo loans may largely differ from one place to another.