Qualifying for a mortgage can be a stressful affair. A common problem that
can occur is not having enough income to qualify for the loan amount. If you
have this problem, here are a few possible solutions.
Mortgage Creativity
You find the house of your dreams and need to get a home loan. You have great
credit, almost no debt and have been employed for five years with the same
company. You apply for a loan and are stunned when you are turned down. The
reason? The lender says you have insufficient yearly income to justify the loan
amount.
What the lender is really telling you is it doesn’t think you can afford the
monthly payments for the mortgage. Before you go ballistic, you should sit down
and seriously review your financial situation. Getting a home loan is fine and
all, but not if you are unable to make the monthly payments. Try to be
realistic in your evaluation. It will save you many sleepless nights. But, what
if you can afford the payment?
The first creative solution you may want to consider is an increase in the
amount of the down payment. By increasing your down payment, you will reduce the
amount to be borrowed which can make all the difference in qualifying. If you
can bump the down payment up to 25% of the total value of the property, many
lenders will relax the qualification requirements.
A second creative solution involves alternative loan sources. Initially,
good old mom and dad may be able to help you out. In fact, this is one of the
traditional down payment funding sources for most first time homebuyers.
A less known alternative, however, is your 401k retirement account. Under
federal law, you can borrow up to 50% of your 401k balance. The repayments have
to be made in five years, so analyze how this option will impact your finances.
If you can pull it off, you will be in the advantageous situation of paying
yourself interest instead of a bank.
Regardless of the approach you take, insufficient income need not be the end
of your home buying prospects. Get creative and you can find a solution.
Dan Lewis is with
http://www.gwhomeloans.com - A San Diego mortgage company providing home
equity loan, refinance and mortgages to
San Diego home owners.
