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Little Known Debts that may affect your Loan Approval



 





Little Known Debts that may affect your Loan Approval

Annette Bui| Updated February 18, 2019| Mortgage Programs 101

Outside of credit score, income and assets, the next major thing lenders look at will be your monthly outgoing expenses. What most homeowners or buyers are not aware of are these top debts and how it impacts their mortgage qualifications.

 Deferred Student Loans-most people don’t think about their student loan payments but even if they are deferred with no payment. Lenders have to use whatever is reported on the credit report to calculate your debt to income ratios. Even if you are not making payments, the amount used to qualify can be up to 2% of the loan amount.

 Alimony and/or child support-a good advisor will ask you about this in the initial application. Oftentimes it may be forgotten or overlooked since it will not be shown on your credit report. If child support payments are made and owed up to 6 months after a loan is scheduled to close, a lender may exclude that from your ratios. This is a critical liability as any outstanding late payments can disqualify you from a loan.

 Income tax installments-many sophisticated borrowers will have income taxes they pay on installment plans. Keep in mind FHA loans are typically more stringent on any installment payments made. You want to be able to show at least three consistent payments prior to close without the payment deviating from the agreed amount. Any over payment within the last three payments may affect your qualifications.

 Solar panel loans-in the past decade, solar panels have become a more common addition for homeowners due to the tax credit and energy savings. It is a great savings tool especially if you can use panels without having to pay it in full. However, some solar panel companies will add a lien on your mortgage. Always be sure to find out when you get them installed if you are only paying a fee to use/lease the equipment or if the monthly cost is also to finance and purchase it. Oftentimes to purchase the equipment may result in having a lien on your mortgage and impact your mortgage qualification.




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