Awkward Mortgage Questions You’re Way Too Embarrassed To Ask
Life happens. And when it does, your loan officer has answers:
1. Can I get a home loan with no job?
A big part of getting prequalified and approved for a mortgage is verifying your employment and income. Your lender will look at your debt-to-income ratio, W2s for the past 2 years, credit, and more. So what happens when you lose your job before or during the homebuying process? Will you lose your deposit, and can you still qualify? More than anything, it’s important, to be honest. That’s what your loan officer is there for. Failing to disclose that you lost your job before closing could increase your risk of loan default and foreclosure — both in the real world and in the eyes of your lender.
Depending on your financial situation, you may have to scale back. After a job loss, your loan officer will recalculate your earnings, submit a new mortgage application, and provide you with new options. You might qualify for a smaller loan and get to buy a house in that price bracket. Or, you may still qualify for the same loan amount if you have more than one job or a low debt-to-income ratio.
2. How do I take an ex off my mortgage after I get divorced?
You’ve separated from your spouse. But can you divorce your mortgage? During a divorce, factors like mortgage payments, utility bills, home size, and family living arrangements all come into play.
Two options are frequently used to come to a resolution:
Sell your house.
Have one spouse buy out the other.
Selling and dividing the profits is an easy way to resolve the issue of homeownership after divorce. If one partner prefers to keep the house, the spouses will need to settle on a buyout figure — i.e., the home’s appraised value minus the cost of selling to equal the amount of leftover equity split between both parties. Spouses can also arrange a fair buyout figure they both agree on. The spouse keeping the home may then decide to use a mortgage refinance to pay the buyout. Fannie Mae lets a partner borrow up to 95 percent of their home’s appraised value during a buyout. Purchasing back home with this option will remove the other partner from the home’s title.
3. Does my husband/wife have to be on the loan or deed?
Having a spouse as a co-borrower on a mortgage can help to improve your odds of qualification based on credit score, employment history, and income. But in some cases, you may have a better outlook by keeping your partner off the loan if their debt or credit score could hurt you. In the U.S., you aren’t required to apply for a mortgage in both married names. Bear in mind that your non-borrowing partner may still need to get a credit check during the mortgage process. In this case, the spouse responsible for the mortgage will be the sole name listed on the home’s deed and will also be the sole person legally responsible for payments. While only the borrower is listed on a home’s deed, a non-borrowing spouse can be added to a home’s title using a quitclaim deed.
Adding your partner’s name to your mortgage in the future is possible. You can contact your loan officer with this request, and they’ll either decline or accept by making a mortgage modification. Refinancing your mortgage — taking out a new loan to replace your current mortgage — will also allow you to apply again as co-borrowers.
4. What happens to my mortgage when I file for bankruptcy?
When faced with bankruptcy, keeping your home is likely to be among your biggest concerns. Legally, a mortgage lender can’t punish you for filing bankruptcy by changing your loan terms or raising your rate. Some homeowners filing for Chapter 7 bankruptcy may be at risk of losing their homes. A homeowner filing for Chapter 13 bankruptcy may be permitted to keep their house and continue paying their mortgage. This is the time to call or sit down with your loan officer. They’re always there to help. Your loan officer will find ways to work with you, with options to modify or reaffirm your loan, so you can keep paying on and living in your house.
5. Does it matter if I owe back child support?
Child support arrears can show up as a negative mark on your credit — another component that factors into your mortgage prequalification. Back child support that has reached the collection or judgment phase may make you look like a greater risk to a lender. Talking openly with your loan officer, as well as discussing the ways you’re trying to pay down the debt, could improve your odds of loan eligibility. Neglecting to tell your loan officer in the hopes that arrears won’t show up on your credit report could sabotage your loan approval.
To show how you’re managing your debt, your loan officer may ask for a court-approved repayment plan or proof of payment. Paying the debt in full can also ease the burden on your credit and will make you eligible for mortgage programs like FHA and VA that require either a formal child support arrears repayment plan or total payoff.