[Connie]

Let’s delve into the 30-day late payments issues and their effect on credit and mortgage applications as follows:

How lenders view a 30-day payment overdue:

Lenders usually see this as a repetitive late followed by borrowers instead of a one-time incident. A rolling 30-day late means you are paying 30 days due every month.

Applying for a mortgage with 30 days late payment:

It’s feasible, but it may be more difficult. It will depend on:

• How recent the late payment was.
• Your overall credit history.
• Other factors in your mortgage application

Consequences of a 30-day overdue payment:

• Only some borrowers view a 30-day overdue payment as dangerous as 60-day and 90-day late payments.
• As they aggravate the score even more.
• However, it also negatively affects the score, even if it may be positive.

What is a rolling 30 day overdue bill:

• This means that instead of being on time, you will be on time by 30 days every month instead of catching up on the payment.
• Like a delinquent client about foreclosing their loan, lenders also need explanations regarding late payments.
• It is advisable to apply frankness and justification when providing a late payment.
• What follows justifies the reasons provided for making the payment late.

What measures have you implemented to ensure these payments are made within the stipulated time frame?

• If the late payment was due to special circumstances, please attach documentation.

The period in which the mortgage payment is 30 days late for recovery:

• Realistically, credit-tracking recovery may span several months to a year, depending on the individual’s overall credit profile.
• Over time, this negative impact is reduced if timely payments are made.

Effect on the credit score:

• Being late on the payment for 30 days can lead to a 50-100 point reduction of the credit score.
• In some cases, the decrement may be more than that based on the previous credit status and duration.

Moving forward after being a 30-day late payment:

• The time horizon is different.
• However, if you can maintain on-time payments, there could be improvements within 3-6 months.
• Full recovery is approximately 24 months with gradual progressive improvements.

Addressing a late payment of 30 days or longer:

There are various options available:

• Making a goodwill request to the creditor
• If the late payment does not belong on the credit report, challenge it
• Come to a ‘pay for delete’ agreement (less common with mortgage companies)

Repairing the damage to credit score after a missed payment:

This process will not last; instead, it will be months or even years since:

• Other Parameters.
• Number of times payment is being done late.
• Individual efforts towards credit healing ( paying on time, cutting down debts)

The time frame for the sale of goods on the Credit score:

• A 30-day late payment on your credit score may stay on your credit for up to 7 years.
• But its significance reduces as time goes by.

The points removed with regards to the 30-day late payment experienced:

• How long does rebuilding the credit after missing a mortgage due payment take?
• An average period for observed recovery is from four to six on-time payments made routinely.
• But the extreme state of affairs can last up to two years.

Important Points:

• A lender must know that a 30-day late payment significantly lowers your credit score and competency in a mortgage, especially when there is a rolling 30-day late payment.
• This clarifies that there is a way back, although it will take quite some time, and regular on-time repayments are made.
• Thus, do not wait for trouble. Talk creatively to lenders and work on the credit.

You should talk to a center like a money management international consumer credit counselor or a financial planner and seek a more source.

While this statement is generic and applies in most circumstances, there may be reasons why you try to avoid individual advice from a professional.

[Connie]

Status of Mortgage Payment and Possession of Collateral Foreclosure

Is A Home Loan Delinquency of 120 Days Equivalent to A Foreclosure?

• No, but it’s a critical stage:
• At 120 days late, your lender can take steps to start a foreclosure, but there is no foreclosure yet.

After how many late mortgage repayments can foreclosure commence?

Typically, four missed payments:

• Foreclosure proceedings may commence after 120 days of defaulted payments (generally four missed payments in a row).
• Social Security disability does not qualify for an exception to the 120-day foreclosure period.

Exceptions include:

Why have the mortgagor tax?

• Pre-emptive court actions such as bankruptcy can change dates.

What Do 120 Days Delinquent Speak Of?

• In layperson’s terms, one hundred twenty days delinquent means that you have not paid your mortgage for 120 days and are likely to face the prospect of losing the property.

What is the 120-day Default Period for a Mortgage?

• The 120-day default period can also be defined as a compulsory waiting period whereby no lender can undertake foreclosure to give the borrower time to consider other options.

How Many Payments Can You Miss On A Mortgage Before You Are Trouble?

A lot of time up to 120 days:

• After 120 days, the lender can initiate foreclosure.
• However, please make sure to call your lender sooner than later so that you can discuss this.

How Long Can You Be Late with Your Mortgage Payment?

• Usually for up to four months[120 days].
• After this, foreclosure can begin.

What Happens If You Cannot Make A Payment For 3 Consecutive Months In The Mortgage?

Pre-Foreclosure Status:

• You will receive notices, and your lender might try to mitigate the loss.
• However, the lender may commence foreclosure following the next payment default.

Can a bank still foreclose on the house even though you have remitted partial mortgage payments?

Yes, where payments made are not sufficient:

• Although it is hips that payments are made that cover the agreed amount, the lender can apply for foreclosure.
• However, some lenders will seek other ways to avoid this.

Key Takeaway: If you have fallen behind on payments, contact your lender immediately to determine whether a home loan modification may be feasible and eliminate the need to go into foreclosure.

[Connie]

The time frame of how long a borrower may take to clear the conditions given in a conditional loan approval will be different for all approval conditions. The time frame of clearing conditions on a conditional loan approval is put under a few days to a few weeks upon consideration of parameters like those discussed below:

Type and Complexity of Conditions:

Minor Conditions: This documentation is often sent to support additional documents. Minor conditions include updated pay stubs, bank statements, or even proof of insurance. Such conditions may take less than a week to clear.

More Complex Conditions: Other conditions seem more difficult due to verifying. Additional conditions, such as resolving credit issues, explaining exorbitant deposits, or getting the extra property surveys performed, depend on a case-by-case scenario.

Your Responsiveness

It is best to provide the requested documents and particulars as soon as possible. Getting the requested documents as soon as humanly possible without delay enables the conditions to be cleared sooner. Reducing response time may also reduce the time it takes to clear the conditions.

Lender’s Efficiency

This is also the case when it comes to how fast the lender reviews and processes the documents you have submitted regarding the condition. Other lenders may do it within a day or two, while other lenders may take a week or so.

Underwriting Workload

When the underwriting department is busy with many loans, reviewing conditions and recommending their clearance may take too long. This is usually the case when that side is busy.

Role of the Third Party

In cases where such clearing conditions entail third-party engagements like sourcing a fresh appraisal or requesting a payoff letter from another lender, the timeline is generally dependent on the speed at which these particular third parties are able to furnish the required details.

Typical Timeline:

Quick Turnaround: 2-3 days on straightforward conditions.

Average Time: 5-10 days is typical in most cases.

Longer Scenarios: 2 weeks and above. All conditions are established if they are intricate or if the conditions of collecting or examining the required documentation experience delays.

Tips to Expedite the Process:

Organize Documents: Organize and prepare all required financial documents.

Stay in Touch: Stay in touch with your loan officer, and do not hesitate to provide any required information when requested.

Follow-up: Call in occasionally to check if everything is running smoothly.

You will receive a “clear to close” once all the conditions have been answered, and this will lead you to the next step of booking the closing date.

[Connie]

People on commission income need to have a two-year history of commission income required to qualify for a government-backed or conventional loan. You need to show two years of federal income tax returns to be eligible to qualify for a mortgage loan. There are alternatives for those who earn commission per sale and aim to get an FHA loan or other loan programs. The following is what you need:

FHA Loans for Commission Income

• Time: Most lenders will want you to have earned commission income for at least the last two years.
• Average Income: Generally, a two-year average of commission income is used to qualify.

Income Documentation: You will be required to include:

• Last two years’ federal income tax returns.
• W-2s
• Most recent pay stubs.
• VOE (Verification of Employment) from the prospective employer.

Debt-to-Income Ratio on FHA Loans:

• Usually, the total monthly debt, including the new mortgage payment, should not exceed 46.9% front-end and 56.9% back-end debt-to-income ratio on automated underwriting system approved FHA loans.

HUD Manual Underwriting Guidelines on FHA Loans:

HUD manual underwriting guidelines have lower debt-to-income ratio caps. Here are the HUD manual underwriting debt-to-income ratio caps:

• 31% front-end and 43% back-end with no compensating factors,
• 37% front-end and 47% back-end with one compensating factor, and
• 40% front-end and 50% back-end with two compensating factors.

Credit Rating:

• An FHA loan with a 3.5 down payment requires a credit rating of at least 580.
• For a 10% down payment, it can accept a rating between 500 and 579.

Other Mortgage Programs for Commission Income:

Conventional Loans: Like FHA, these loans require a two-year history and will average the last two years.

VA Loans:

• Commission income is also acceptable for VA loans if the applicant qualifies.
• Like other mortgage loans, you must have a two-year commission income history to qualify for VA loans with commission income.
• There are no maximum debt-to-income caps on VA loans approved/eligible per the automated underwriting system.

VA Manual Underwriting Guidelines on Debt-to-Income Ratio

VA loans allow for manual underwriting. VA manual underwriting caps the maximum debt-to-income ratio as follows:

• 31% front-end and 43% back-end with no compensating factors,
• 37% front-end and 47% back-end with one compensating factor, and
• 40% front-end and 50% back-end with two compensating factors.

USDA Loans: For commission income, these loans can also be applied for rural properties and will require mostly a two-year history.

The basic qualifications:

Evidence of Employed Stability: Although one’s income may vary over time, one must showcase that one is consistently employed.

Income Level Stable or Growing: This is a common approval since lenders want to note a stable income progression over the years.

Equity: This depends on the loan being applied for(3.5% for FHA under a good credit score, possibly 0% for VA or USDA).

Savings: It is important to note that being cash-liquid would enhance your application more when the income is not consistent.

Property Requirements: The property must meet the loan program’s standards (e.g., HUD guidelines on property standards).

Tips for Success:

• Put aside some additional income so that you will be able to work economically if your application is accepted or the amount needed is met.
• Be meticulous in the pay records if you are involved in commission, alternative incomes, or self-employment, for instance.

Engaging or consulting with a mortgage broker specializing in commission-based income loans may be wise.

When applying for a commission loan, you may be required to wait until you accumulate enough commission before qualifying when the commission income is new.

This is because although most lenders will aim for a specific amount, their discretion may differ slightly. Therefore, it is prudent to shop around. A mortgage professional is there to assist you and help you choose the best-fitting loan program for the specific type of income, namely, commission income.

[Connie]

What are mortgage points?

Mortgage points are upfront fees paid at closing in exchange for a reduced interest rate on the loan. Typically, one point equals 1% of the loan amount and decreases the rate by an eighth or a quarter of a percent, depending on the lender.

Purpose of Discount Points

They aim mainly at reducing monthly mortgage payments throughout their life span, thus creating long-term savings.

Who Charges Discount Points?

Lenders are responsible for charging these fees, which borrowers pay during closings.

Benefits for the Buyer

Depending upon how long one intends to stay put, buying these little guys can save you some serious money over time. This is especially if we’re talking decades here when our houses become homes forever.

Is it worth it to pay a discount point?

To determine whether or not it is worthwhile to purchase points, calculate a “break-even period”. How many months before lower monthly costs surpass initial expenditure. If this number happens to be less than your expected tenure (i.e., number of years staying), go for those bad boys!

[Connie]

When applying for a mortgage, you can use past W-2s and a current year-to-date (YTD) pay stub. This is even if the latter includes overtime income, if OT income has been seasoned for the past two years and it is likely to continue for the next three years. Nevertheless, there are factors to consider:

Salient Points:

Income Stability:

Lenders prefer that an applicant has had a steady income over some time. If overtime forms part of your regular income and has been so for the last 24 months, they may consider it when calculating your qualifying income. In this case, they will average such earnings for the past two years to determine what is acceptable.

Verification of Overtime:

To verify this fact, lenders usually expect employers’ Verification of Employment (VOE) to show that overtime work is ongoing and predictable.

Documentation:

Two of the most recent years’ W-2s, recent pay stubs (including one with YTD earnings), and sometimes an employer’s letter are usually required. Additionally, the lender may request tax returns if there are large amounts of OT or other types of variable income.

Income Calculation:

Suppose an employee’s overtime pay tends not to be constant. For example, annually varying the amount earned within consecutive 24-month periods could affect how much money one can qualify for as a loan. In such cases, there might seem to be significant differences between what one has made this year through extra hours worked beyond regular shifts and what was earned during any previous calendar year doing the same thing. Using previous W-2s and current hourly or salary on the employment offer letter as qualified income is customary. Plus, the past two-year average overtime income (verified via employment verification) can be used when applying for a mortgage. Ensure that the overtime income is regular and well documented since lenders want proof of its stability. Overtime income is verified by the employer via employment verification. The chances of overtime income continuing for the next three years need to be likely. Talking with your lender can help clarify what portion will be used in calculating qualifying income based on these documents.

[Connie]

Yes, a non-occupying co-borrower can be a friend and not a family member, but this is determined by the loan program you are using.

FHA Loans (HUD Guidelines):

For FHA loans, it is usually required that a non-occupying co-borrower must be related to the primary borrower by blood, marriage, or law (such as a close family friend who has had a long-standing relationship with the borrower and may qualify under specific circumstances). However, this rule may have some exceptions depending on certain factors presented to an underwriter at the time of submission. If they can make a good case for themselves and their relationship with applicant[s], then sometimes the lender might go along with it; otherwise, being related is normally necessary.

Conventional Loans (Fannie Mae and Freddie Mac Guidelines):

According to Fannie Mae or Freddie Mac guidelines, non-occupying co-borrowers do not have to be related to the main borrower. This means any individual with a strong financial background, including friends and business partners, could act as your non-occupying co-borrower. These programs tend to have more flexible relationship requirements compared to FHA loans.

Main Differences:

FHA Loans: Non-occupant borrowers generally need some blood, marriage, and legal tie, though this is not always true in all cases.

Conventional Loans: Fannie Mae & Freddie Mac will allow unrelated parties to serve as non-occupant borrowers if they so desire. Your friend would only qualify if they were related to conventional loans such as Fannie Mae or Freddie Mac. However, for an FHA loan, I would like them to have some kinship through blood, marriage, and legal ties. The underwriter may waive this requirement based on our lender’s flexibility.

[Connie]

Certainly, you can use your wife’s revenue to apply for an FHA loan despite her negative credit ratings. However, here are some important points:

Non-Borrowing Spouse:

If your wife has a very poor credit history, you have the option of listing her as a non-borrowing spouse. This means that her income may be considered when qualifying for the loan. Her credit will not be considered during the approval process. Instead, her debts will be included in calculating the debt-to-income (DTI) ratio.

Joint Application:

If you opt to apply jointly, both your credit scores will be assessed. Usually, the lender considers the lower score between the two. This might affect whether you qualify or even the interest rate.

Community Property States:

In case you reside within a community property state, regardless of whether she has taken out any loans. They will still be factored into DTI calculation. This is because such places treat all debts incurred by one spouse as joint obligations potentially impacting qualification. But having said so, it’s worth mentioning that using her income could help improve your DTI ratio.

FHA Requirements:

These loans are known for being more lenient towards low credit ratings. Therefore, even if your partner does not have good scores, there is still a chance of eligibility, provided other compensating factors exist. For example, a larger down payment or higher earnings exist.

Strategies:

Here are a couple of strategies you can consider

Non-Borrowing Spouse: To avoid affecting the loan with their bad score, thus only benefiting from their income,

Credit Improvement: Try enhancing their ratings before applying to increase the chances of giving better terms.

To conclude, with an FHA loan. Even if my wife has terrible credits, I could use her money to apply. But I must decide whether she should become a borrower or act as a non-borrowing spouse. You should consult an authorized FHA lender for guidance based on your specific circumstances.

[Connie]

Example Cases on the Operation of Discount Points

Case 1: Small-Savings Loan

Loan Amount: $300,000

Interest Rate Without Points: 3.5%

Interest Rate With 1 Point: 3.25% (Cost: $3,000)

Monthly Savings: $42

Break-Even Period: 71 months

Result: Worthwhile if staying for more than six years.

Case 2: Large-Investment Loan

Loan Amount: $500,000

Interest Rate Without Points: 4.0%

Interest Rate With 2 Points: 3.5% (Cost: $10,000)

Monthly Savings: $142

Break-Even Period: 70 months

Result – Good if staying for over five years.

Case 3: Short Term Stay

Loan Amount I borrowed: $250,000

Interest Rate Without Points: 3.75%

Interest Rate With one Point: 3.5% (Cost:$2,500)

Monthly Savings:$34

Break-Even Period: 74 months

Outcome – Not worth it if you plan to sell within six years.

In every scenario where somebody buys discount points, it reduces their monthly mortgage payment, but you have to calculate how long you’re going to stay with the mortgage to determine whether it’s a good financial decision or not based on when the break-even point is.