Real Estate NewsWhat Counts As Income
In the old days, mortgage lenders asked questions you
wouldn"t believe. For starters, they counted only a husband"s
income on the theory that a woman was likely to have a child
and quit her job to stay home with it. I knew one woman who
went through the humiliating process of submitting a
certificate from her doctor, attesting that she was unable to
bear children.
Only if the woman was a college graduate and a
professional could that rule be bent.
Single women were sometimes in a better position when they
applied for a mortgage loan. I remember one doctor,
though, who was separated from her husband and who went to the
length of divorcing him so she could qualify for a loan, only
to be turned down by the lender in the end.
Today, of course, not only husband and wife but also
unmarried persons can pool their incomes to qualify for
mortgage loans together.
Lenders like to see applicants with at least two years"
continuous employment in the same field, though of course they
make allowances for those recently out of college, the armed
forces, -- or jail.
I once heard a broker making an exploratory phone call to
a local lender, explaining that the house-hunter he was
working with had no debts at all, perfect credit "of course
that"s because he"s been in prison for the past three years,
does that matter?" The agent hung up and came away beaming;
the lender said it didn"t matter at all, "bring him in and
we"ll see what his income looks like."
Bonuses, commissions, overtime, seasonal and part-time
income are taken into consideration, subject to employer
verification and with varying time limits. Borrowers may
include dividend and interest income, Social Security and
pension income. The self-employed are usually asked for copies
of two years" past tax returns, and perhaps an accountant"s
report on current operations.
Alimony and child care payments can be claimed, usually if
they are subject to court order and there"s proof that they
are actually received.
Expected rental income, from the other half of a
two-family house for example, is counted in varying amounts
anywhere from 50 percent to 95 percent, depending on the type
of loan being sought.
In recent years, special programs have been developed to
assist borrowers who are marginally qualified.
In the old days, for example, lenders weren"t even allowed
to pay attention to "But we"ve been spending that much on rent
all along with no trouble". Today, with some mortgage plans,
it helps to show a history of prompt rent payments higher than
the monthly mortgage payment being sought.
I"m Edith Lank, and I wish you good luck.