San Antonio Real Estate

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Thursday, September 23, 2010

Critical elements of the mortgage process: your income

If you want a mortgage, you have to have money coming in.  It can be from your employment, retirement, pension, alimony, child support or other sources.  The name of the game here is going to be: document, document, document.

The underwriter will look at everything very closely and different types of loans may have different rules.  Here are a few examples of requirements:
 - you will be asked to bring your tax returns for the last 2 years (with W-2's, 1099's, etc. based on your situation);
 - people who are self-employed or paid commissions must show 24 months of acceptable income to qualify;
 - veterans will have to bring the appropriate papers to show their entitlements;
 - if you have money coming in from rental properties or properties that you have financed, retirement benefits, pensions or any other income, you will be asked to show where the money's coming from, how much, and for how long.

One more thing to consider is your debt to income ration (DTI).  With excellent credit, you can still go up to 50%-52% of your income going to expenses including mortgage, property taxes, homeowners insurance, child support, credit cards, car loans, student loans (basically the debt you have showing on your credit report where you still owe more than 10 months' worth of payments).  If your credit isn't so stellar, you're looking at a 45% limit on your DTI.

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