Profile picture for imapuglover

Can I qualify for a Mortgage while on Workers Comp?

I have been off work for a couple of months because of an on the job injury. They had to do surgery, and I am not ready to return to work yet, but will go back in another couple of months. In the meantime, I have an opportunity to purchase a house that I have always wanted. I currently own a house with a current market value of about $225k or possibly a little more. I owe about $110k so the rest is equity, and also own a vacation property outright worth over $100k. The property I want just came on the market for $250k, but can be bought for less. I know it will be sold before I can get back to work. I called my current lender, and they want me to go back to work & have 5 pay checks before they will do the loan. I think I can get closing posponed until Febuary, but I need to prequailfy to get a contract, then I could get the loan in Feb b4 closing. I also have about $2k a month income besides the workers comp (which is $1220 every other week). No other loans, cars pmts or bills except utilities and so forth. Thank you
  • November 16 2007 - US
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Answers (35)

Profile picture for imapuglover
I would just like to add that I am looking for a fixed rate 15 or 30 year loan with a REPUTABLE company or BANK, NOT some subslime barely legitimate lender with some crap products. I am not a fool, and won't pay due dilligence or other junk fees.
  • November 16 2007
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Profile picture for MORTGAGE OPERATOR
Where is the house?
What is your credit score?
How much Down payment?
Will this be your primary residence or investment property?
What is the best price for this home you think you can get? 225K?
Can the seller make contributions to your closing costs? maybe 3%?

You should be able to get from 6% up with 100% financing...or better if you're puting a down payment to bring your LTV down.
  • November 16 2007
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Profile picture for cheesebrie
location, credit score, down payment etc all above questions apply before anybody will be able to properly answer your questions.
Or contact your indenpendent mortgage broker if you have one. He is going have same questions.
I do not advise to talk to a bank because they will push their only program when there is usually much more choices out there. Plus each bank you visit they will pull your credit and with certain number of inquiries your score will go down. Plus they will not show it to you.
Broker will pull your credit only once and he can fax the copy to unlimited number of lenders without affecting your score. Best is not older than 30 days old.
Your credit is going be pulled once again when broker is going make final subbmittion to chosen lender to finally obtain the loan.
  • November 16 2007
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Profile picture for imapuglover
Amerisave & cheesebrie,

Thanks you for the replies. Here is the info

Ormond Beach, Fl

depends on which CRA - 650+

I will be listing my current home for sale. I will need to sell it b4 closing on new house or get a bridge loan. I will have about $100k or more in equity out of the sale that will be going toward the new loan. I will be putting up $5k ernest money if & when we write the contract.

It will be my primary residence

Not sure about final price, I am hoping about $225k or less before costs

I have no idea if the seller will help with closing, it is an estate sale, and vacant, it is now in a relatives name. I will already be asking to wait until Feb to close due to Fl tax reform and portability (which I am hoping will pass Jan 29) in addition to regular contingencies and price reduction. LOL

I don't want to jump in and write a contract and put my $5k down unless I know I can get a mtg, and if I go ahead and deal with a broker b4 asking about this, I will probably lose more points on my CS because of getting it checked. BTW, some of the reason my score is low is medical bills (were to be paid by ins & weren't) that are over 6 yo that should begin to fall off in Jan.

I do not have an independant broker. My current home is bank financed.
  • November 16 2007
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Cheesebrie,

You are mis informed about credit inquiries. If you would like I could e-mail an article that was in the Washington Post entitled "The Truth About Credit Inquiries" written by Michelle Singletary back in May of 2005. The article explains that credit inquiries while purchaseing a home as well as a car do not negatively impact your credit score as long as the last time your credit was pulled was within 45 days. It is impossible for a lender to accurately quote loan programs without a credit score and credit report.

Imapuglover,

Don't rule out banks. I work for a bank and can tell you that I can offer anyprogram a broker can offer as well as portfolio products that a broker cannot offer. Granted not all banks operate the way mine does and some of the smaller banks only offer bank products.

As for purchasing the property your issue is going to be in evidencing that the disability income is likely to continue for the next 3 years. I am guessing that you are on short term disability and you are expect to go back to work. I am not 100% certain but I would be suprised if you could get a loan documenting your income while being out on disability. Although you would not have to be back to work for 5 paychecks you would likely need to evidence that you are back to work or you would have to be approved for long term disability.

Because of your income situation any loan that you obtained is likely to be a non conforming loan, meaning that you would be paying a higher rate than what you would if you could fully document your loan.
  • November 16 2007
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Typically, you would need to return to work and show evidence of 1 paycheck in order to qualify for a loan according to Fannie Mae rules.
  • November 16 2007
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Profile picture for imapuglover
Sean -- prmg.net

Thank you for the information. I will keep it in mind. Any other input is welcomed.
  • November 17 2007
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Profile picture for MORTGAGE OPERATOR
Sean is correct.. you should wait to return to work...

With your info..650 Credit Score...Down Payment of 100K.in FL you can get after being approved:

Loan Amount: $125,000.00 State: FL
Purchase Price: $225,000.00
Interest Rate: 5.375%
Product: 30 Year Fixed Documentation: FULL
Total Closing Costs $8,610.25 plus escrows (seller might pay for some of this)
Government Taxes and Fees $2,412.50
Total Monthly Payment: $699.96 + Taxes and Insurance
NO PMI
  • November 17 2007
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Profile picture for MORTGAGE OPERATOR
15 Year Fixed

Loan Amount: $125,000.00 State: FL
Purchase Price: $225,000.00
Interest Rate: 4.750%
Product: 15 Year Fixed Documentation: FULL
Total Closing Costs $8,698.50 plus escrows (seller might pay for some of this)
Government Taxes and Fees $2,412.50
Total Monthly Payment: $972.29 + Taxes and Insurance
NO PMI
  • November 17 2007
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30 year fixed at 5.375%...........................Ya right, ugh the bs on this forum sometimes.
  • November 17 2007
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He doesn't qualif with workers comp. Easy to lowball. Look atthe fees, jeez.
  • November 17 2007
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Just poking you Amerislave.
  • November 17 2007
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Ps.

This is under the impression you will need to refi your house to purchase the other one.

If you want to use your own money for downpayemnt, I can also get you 95% ltv purchase money. It would have to be full doc.



Since u already own a house, you wont qualify for FTHB or any other easy program, so dont be fooled.

Get your house rented or sell it before you purchase , or you wont be able to meet the 'DTI' requirements.

If you pull all this off, then I can get u the purchase money 95% ltv at 5.875% but you will have extra costs in escrow set up and pmi.

www.daviehomefinance.com

I would strongly suggest refinancing your house you own now to pull out equity so you can purchase with better terms .
  • November 17 2007
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Profile picture for MORTGAGE OPERATOR
My quotes are not BS or NACA Rates..

These are rates that I can get him if he sales his current home, dump 100K into the new home with the Credit Score of 650
  • November 17 2007
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Profile picture for MORTGAGE OPERATOR
Iamapuglover, is your current home listed?

Too bad you're probably not ready today.... as long the house you're buying appraisals for $225K.. you put down 100K..(you said that)..with your credit score of 650 I could get you pre-approved today... Everything you see on my site is what you get.. as long all the above is correct.. I do this everyday and I know.
  • November 17 2007
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Profile picture for imapuglover
My house is not on the market. I had not anticipated selling it. I have just had my eye on this particular house for a while, and it came on the market at a bad time for me. Figures. LOL

My credit score was nearly 800 in Feb of 2006, and I only owed $20k on my house before I REFINANCED my house to pay for the cabin I bought in the mountains in Feb 2006. So, since my debt is more, I have a lower credit score.

I don't want to pay nearly $10k in fees for a loan. I don't HAVE to have this house, I just want it, and it would be nice if I could figure out a way to work it out. I am always current on my mortgage, in fact, I have a 15 yr loan, and always pay an extra principal pmt every month.

I don't want to close until at least Feb because one of the contingencies will be that the tax reform passes so I can have the portability to take my SAVE OUR HOMES tax rate to the new house. I am not into paying the State of Fl an extra $2200 in taxes every y because I buy something else before the reform passes.

Renting/leasing my current house is an option, in fact I did it about 15 yrs ago in order to get into this house. I had the other one on the market & the lease terminated when it sold. Worked out great. I had forgotten about that, thanks for reminding me.

I could come up with a max of say $12k without selling my house - right here at Christmas and all. Hey I can get another few K if you want a motor home that I have & never use! LOL Anyhow, that wouldn't get me a 95% and pay the closing costs.

Far as refinancing this house & using the proceeds to pay the down payment on the other house, I don't want to do that. Sounds like 2 sets of fees - one for the refi & one for the new house mortgage.

I am thinking seriously about trying to return to work the first wk of Dec. That should work out for a few pay checks b4 the reform, IF my dream house don't sell b4 that. I could get LTD, I paid for it but would rather work.

THX, PUG
  • November 17 2007
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Profile picture for MORTGAGE OPERATOR
You said "I will be listing my current home for sale. I will need to sell it b4 closing on new house or get a bridge loan. I will have about $100k or more in equity out of the sale that will be going toward the new loan. I will be putting up $5k ernest money if & when we write the contract.

It will be my primary residence"

You have other options without paying 10K in fees.
Paying higher fees upfront is one option to have a lower payment

You can pay only 2K in fees and pay an extra $174 a month
Do the math
You saved 8K.. divide 8K by 174 = 46 months
On the 1st scenario you could break even in less than 4 yrs.
After that....you would be saving $174 a month for the next 26 yrs

You have to decide if you want keep the property for a long time.

People let them get scared by higher fees upfront fees, but if you do the Math and plan to stay in the property for a long time you can the benefits of getting a better rate with a upfront investment.

You could also keep the 1st property.. have it rented and get 95% LTV financing with a payment around $1200 a month plus taxes and insurance.
  • November 17 2007
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Profile picture for Anne Credit Union
If you belong to a credit union, you may talk to them because they tend to approach issues on a common sense basis. Many of them don't sell their loans but portfolio them instead. It is very possible that they could qualify you on your present income if they get some indication that you definitely will return to work or if you don't, that your disability income would continue. I am an underwriter for several credit unions and we do this quite often. If you don't belong to a credit union already, there are many credit unions you can join if you live, work or worship in their membership area. Since it sounds like you would have some options if you got in trouble with your equity in other real estate, I think you would have a good chance.
  • November 18 2007
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Profile picture for imapuglover
Amerisave,

Yes, I did say that I would be listing my house. And that I need to sell b4 I close on the other one, if I am going to put $100k down. I had not PREVIOUSLY been planning to list it for sale when I bought the place in the mountains, or at any other time, up until I found that the house I had been watching and wanting became available.

Fees are FEES if thay are paid upfront or added into the mortgage it still is money paid for fees. Compounded even more if financed in with the mortgage.

So, are you saying that I could possibly or probably qualify for a mortgage for the house I am want ing to buy at a reasonable rate at the current time? Costing me $11k in fees, If I am able to get a lease or say rent to own my current residence? Without having to sell my current house first or refinance to cash out? It still sounds like a lot of fee's to me. BTW, What would the rate be if I don't "DUMP $100K INTO THE NEW HOME"? Fixed rate, no early payment penalty 15/30 yr?
  • November 18 2007
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Profile picture for MORTGAGE OPERATOR
Yes.. with all the Info you've provided...and remember.
Seller might pay for some of your fees.

1.Come back to work and have 2 pay stubs
2.You don't have to sell your house
3.have it rented/leased with a signed contract

I have the following today 100% LTV..$0 Money Down:

Loan Amount: $225,000.00 State: FL
Purchase Price: $225,000.00 Property Type: SINGLE
Interest Rate: 6.000% Property Use: HOME
Product: 30 Year Fixed Documentation: FULL
Total Closing Costs $9,034.50 + escrow
Government Taxes and Fees $2,962.50
Total Monthly Payment: $1,528.99 + Taxes and Insurance
NO Pre-payment Penalty
  • November 18 2007
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Getting the silent treatment now Tom........tsk tsk
  • November 19 2007
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Amerisave -

We have received you flags. The problem is, you posts seem to be spamming a bit, meaning you still somehow incorporate your services or what you can get for people if you they try your services. I'm saying this in the interest of fairness to Tom.

I'm quoting you here. "These are rates that I can get him if he sales his current home, dump 100K into the new home with the Credit Score of 650". This may be where the antagonism is coming from, don't you think? We do not tolerate spamming of any kind on these boards. If you have a product to advertise, please do so on your profile.


Tom -

Your approach is still a bit too strong. Can you mellow it down a little?
  • November 20 2007
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srry Micheal.

I have an 'underdog' mentality, and when i see people being potentially abused, it really bothers me.
  • November 20 2007
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oh yes.

and there is NO WAY he can get this guy a 100% loan to value with NO PMI loan for 6% .

Homeowners want to believe it, hoping against hope it could be true.

The guy is on workers comp, and no way fannie or anyone will take his income until hes been back for 90 days, and will average it out with his Workers comp regardless.

He would have to be back to work 6months before they take his straight pay as income.

There is no 'magic pill' Amerisave has that Fannie Mae, Freddie mac sponsored wholesale lenders dont have.

I know the guidlines very well, and he doesnt qualify for any special program due to the fact he already owns a house.

And this is what infuriates me, is when someone comes on here promising the impossible.
  • November 20 2007
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Tom -

That's more like it. Thanks.
  • November 20 2007
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I hate to agree with tom.....but I do!

almost the entire post. If he went back to the same job I do not believe he would need to be back for 90 days. A letter explaining the low YTD earnings should work. But I could be wrong on that.
  • November 20 2007
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Profile picture for MORTGAGE OPERATOR
Sorry Miachel for any missing understanding.. I never had a chance to explain anything and Tom starting shouting ... this is nonsense to try to debate anything.

I never said there were no PMI.. the payment included that... YES..I based my info thinking like SalemFive.. he's on the same job.. soon he returned with 2 pay stubs he should be able to explain... I've talked to my management and that is what I was told... and the only way to find out is to actually applying and sending it to our UW.

I just closed a loan for a customer with a 30 fixed 6% that had no income last year due to a internship ..and with a simple explanation letter it was done.. I admit that the credit was execellent the LTV was around 28%..it was a golden loan.
  • November 20 2007
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Good point Salem....if it is the same job he would not need any seasoning on it due to his prior history, just proof that he is back and able to resume his prior job related responsibilties.
  • November 20 2007
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Oh and you're missing michael's point Amerislave, youre not supposed to solicit every borrower that comes on here asking questions like you do. ( Oh and save the "i was just supplying free information" speel for someone who believes it)
  • November 20 2007
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I said I'm sorry
  • November 20 2007
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