real estate finance - full book (500 pgs)

If the additional funds are a gift from the parents

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Unformatted text preview: as part of the income for repayment of the mortgage. In the past, most lenders discounted or disallowed this type of income as part of the stable monthly income, but this practice was stopped with the passage of the Equal Credit Opportunity Act. These payments, as with any other income, will be verified by the lender as to their amount and frequency. Retirement Income – Since the age of the borrower can no longer be used as a criterion for the granting of mortgages, more people are buying homes with the intention of retiring and financing the dwelling based on retirement income and personal savings. So income from social security and other pensions or trust funds can be used to establish the stable monthly income. Pensions and Social Security –Income from pensions and Social Security are counted if such sources are expected to continue on a steady basis. Copies of pension plans are required. Military Personnel – Military personnel receive extra pay for quarters, clothing, and rations in addition to their base pay. When qualifying someone in the military, all of these extras are added to arrive at the true income. In addition, lenders take into account that military personnel receive free medical and other services. STABLE MONTHLY INCOME After a lender has determined whether a borrower earns enough money, the next step is to analyze the stability of that income. The stable monthly income can be defined as “the borrower's gross monthly income from primary employment base earnings, plus recognizable secondary income.” Let us examine the factors that can affect the stable monthly income. Dynasty School (www.dynastySchool.com) 13-11 REAL ESTATE FINANCE To accomplish this, lenders look at such things as: 1 Pattern – First, you must establish the employment pattern of your prospective buyer. Has the person been a job hopper, jumping from one type of work or profession to another for no apparent reason? Lenders look for a pattern of full employment and job changes that imp...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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