Income stability is the key attribute that mortgage underwriters wish to see in a home loan applicant. When you begin the process of buying a home and applying for a mortgage, your lenders review your financial history very carefully.
Based on the policies of the bank, what they know about risking large piles of cash, and what they can determine about you. Loan officers will look at both you the property that will secure the mortgage, particularly if it is a conforming loan.
Impressing Your Mortgage Decider With Income Stability
It all comes down to lenders liking what they see in your background. Banks have financial targets and specific definitions about the kinds of loans they want to make and to whom. Competition in the lending market limits how much profit bank can make, but they can control much else of what they want to lend.
The critical point is when your application goes to the person who releases the funds, the underwriter. Mortgage underwriters know their typical borrower exactly, and any deviation will cost you at closing, and in the interest rate, you pay for the privilege of borrowing to buy a home. A record of stable income of at least two years will usually be sufficient.
Get Ready For An Inspection
So, what does income stability look like to a mortgage underwriter? It is a regular, recurring payment in cash, check direct deposit, or wire transfer. Banks have experience lending money and the data to determine if you are a sound investment or not.
Consumers that have stable histories of earning a living and making payments tend to go the course in the long run. Your credit history with the three major reporting agencies will show how responsible at making your payments.
However, credit agencies do not indicate how much income you have or if your paychecks come through regular employment channels. Lending underwriters want to inspect both sides carefully, income and spending to determine how much of a there is that you might not make all of your payments on time.
Dealing With Income Hiccups
Income stability is not the only factor that goes into the lending decision. There are a whole set of factors that lenders review before they make the final credit decision. Gaps in your income can happen for many reasons; don’t lose hope just because you have short gaps in your history.
Situations that might cause concern are missing a few months of income, changing jobs frequently, or being self-employed. Banks and mortgage brokers work with income variations and credit statuses of every description. It is unlikely your situation has never occurred before.
Get advice on how to proceed in financing your future home before you start house hunting. Discuss your income history with your agent or broker. However, you will get a prime mortgage package if you can demonstrate at least two years of income stability.