- How Much Money Is Needed To Invest In Rental Property?
- Should A Real Estate Investor Get An Agent’s License?
- 5 Big Factors That Affect The Costs Of Renovating Your Home
- SIBOR Hike – What You Can Do With Your Current Loan
- 6 Basic Don’ts Of Real Estate Negotiation Tactics
- Will New Condo Relaunches Trigger The Great Property Sale We Have All Been Waiting For?
- 10 Proximity Amenities That Add Value To Real Estate
- How To Get Personal Loans More Easily With Good Credit
Legitimate Ways To Increase Your Mortgage Qualifying Income
It is not a strange coincidence if you personally feel comfortable with the amount you are requesting to borrow but the lender just would not agree to it.
Something somewhere is arousing their hesitation. And that usually has to do with your income.
A mortgage is never a privilege when it comes to lenders.
You see, lenders apply their own internal formulas to determine your qualifying income. They have probably spent millions of dollars to come up with their equations to take a calculated risk on a borrower. So you can expect them to follow them diligently.
There is every chance that a homeowner would be unable to repay the loan installments either by choice or involuntarily.
Your qualifying income is basically the portion of personal income lenders will take into consideration when determining whether you can afford the loan you want.
The most straight forward item which makes up part of your income is obviously your salary.
But that is not the only item.
So if you have other sources of income make sure you make that know to the loan officer so that he can factor that in.
Here is a comprehensive list of income items that can supplement your mortgage qualifying income.
– Wages by the hour
– Overtime pay
– Annual, bi-annual, quarterly bonuses
– Variable pay like commissions
– Company approved allowances (transport claims, housing allowance, travel allowance, etc)
– Impending promotions and pay raise that are in motion
– Child support
– Social security
– Applicable insurance
– Self-employed trade income
– Part-time jobs
– Dividends and interest
– Rental collections
If some of these apply to you and the lender has no knowledge of them, be sure to inform them appropriately so that you have the best chance of getting the loan quantum you are requesting approved.
Some of these items can significantly increase you qualifying income. In some cases even multiply it by several times.
If you are buying a tenanted property, get a copy of the tenancy agreement for the lender to validate. Once they verify it, a portion of the rental income can be taken in as your qualifying income.
It is important to note that what matters most are income that are stable and consistent.
This means that one-time windfalls will not be taken into account as your income.
In many cases, lenders will also not take into account your previous years bonuses if you have changed employers since then.
In fact, it is common industry practice among lenders to totally ignore computerized payslips from a previous employer even if it was generated a month or two ago… putting a borrower’s loan application at risk.
If your earning are seasonal, explain to the loan officer why your income is short in some periods. This is to avoid a misunderstanding that you are holding on to a job with unstable salary.
It can be tough to convince a lender of your salary if you are one who takes them in cash.
So if you are in such a situation, you have to properly document your salary months before applying for a mortgage. It’s best to keep them for at least the most recent six months.
Some of the things you can do is keep a copy of the payment voucher. Then deposit, every dollar and cent that exactly matches the amount in the payment voucher into your personal bank account. If everything tallies, it is a powerful trail that shows your salary.
In this case, it is not uncommon for banks to request account balance statements too to verify that the credited salary are not fabricated.
Although it can be a disappointment to be unable to obtain your required loan, maybe it is a sign that you cannot realistically afford the house.
It could be a blessing in disguise that is helping you avoid going into default in future.
Because should anything happen in future that affects your personal income, you could find it difficult to keep up with the monthly payments which you over-borrowed in the first place.