Hi Friends, Mortgage rates remain unchanged and are still virtually the same as they were last year, which is pretty much the same as they have been for the bulk of the last three years. I am starting to see this impact the markets with more buyers willing to deal with the higher rate environment and get into the market as the memory of mortgage rates from 2020 – 2021 begin to fade.
education piece from last month’s edition, here are some additional income sources that can help a borrower get a mortgage:
If using a second job for additional income, the borrower must have been with that employer for at least the last two consecutive years, otherwise the underwriter will not give the borrower any second job income towards qualifying for the mortgage.
Inventory levels are increasing, and property prices are flattening and coming down in some areas. The condo markets are being particularly impacted by prices dropping, in some areas by as much as 10% or more.
- Asset depletion Asset depletion is for borrowers who have large portfolio assets where the underwriter may divide the total amount in the portfolio by 180 or 360 months to give additional monthly income to meet the qualifying requirements.
The tariffs may be starting to creep into the inflation readings, and I fear that it’s more likely mortgage rates will increase in the short term than decrease. As of the writing of this update, the Federal Reserve has not concluded the July 30 meeting, but the markets have been predicting no change at the July 30 meeting to the Fed’s target interest rate, the Fed Funds. Fed chair Jerome Powell and the voting Fed members are unlikely to reduce the Fed Funds rate until the end of the third quarter or the fourth quarter of this year. The next opportunity for a cut in the Fed Funds rate is September 17 with two more opportunities this year after that on October 29 and December 10.
Continuing the very boring but crucial mortgage qualifying requirements
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Social Security Income SSI. SSI covers both the elderly and disabled. For a disabled person to use SSI income to qualify for the mortgage, the borrower needs to be on permanent disability. The borrower will need to show the bank statements where the SSI is deposited and a letter from the Social Security Administration for the current year reflecting the monthly benefit amount.
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Pension or annuity income Pension income also requires bank statements showing the direct deposits of the pension income along with either a pension/annuity award letter detailing the monthly benefit amount or two or more consecutive pay stubs from the pension/ annuity source.
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Non-Occupant Co-Borrower Adding a non-occupant co-borrower, such as a parent or a relative, is another way to add income to help qualify for a mortgage. The income from the non-occupant co-borrower can be combined with the borrowers’ income but any monthly liabilities also must be added. The non-occupant co-borrower will have to go on title to the subject property at closing but can be removed from title after closing without the lenders’ permission.
Looking at these additional income options we can see that there are some tricks and hoops that must be jumped through to meet some of these seemingly arbitrary underwriting rules and guidelines. There are many esoteric underwriting guidelines for each of these options so feel free to reach out to me if you want to explore any of them in more detail.
If you are curious to see how you can use the current market conditions to your benefit, please reach out for a free consul tation. Stay tuned here for future updates and feel free to reach out for a free consultation if you want to understand more about interest rates and mortgage products. As always, your mortgage guy,
- Departing residence income When moving from one owned primary residence to another while retaining the prior residence, there is a means to use 75% of future rental income from the departing residence to help qualify for the mortgage on the new property purchase. The guidelines on this are too complicated to show here.