The answer is “yes” and this should be good news to a lot of people in a changing work environment.

HUD guidelines say the requirements for an FHA loan do “not impose a minimum length of time a borrower must have held a position of employment to be eligible. However, the lender must verify the borrower’s employment for the most recent two full years. The borrower also must explain any gaps in employment spanning one month or more. To analyze and document the probability of continued employment, lenders must examine the borrower’s past employment record, qualifications for the position, previous training and education, and the employer’s confirmation of continued employment. A borrower who changes jobs frequently within the same line of work, but continues to advance in income or benefits, should be considered favorably. In this analysis, income stability takes precedence over job stability.”

HUD Requirements

First, the lender must look at the last two full years of employment. For this reason it would be smart to have tax returns available for the last three years.

Second, HUD not only wants to know that you now have a job, it also wants some sense that FHA borrowers will have a job in the future. A resume should help but a caution: Make sure your resume is entirely accurate. Claiming degrees, certificates and employment you don’t have could lead to big problems. Have references for every job and qualification you claim.

Third, notice that job tenure by itself is not an issue. You don’t get points working at the mill for 20 years versus a new job every six months. You could have a bout of unemployment. The key issue is income stability, a polite term meaning regardless of how often you get a new job or whether you’ve been unemployed that you continue to make required payments to creditors. If your credit is strong then you can show suitable income stability.

How long must I hold a job to get an FHA mortgage? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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A new study by TransUnion shows that the use of bank-issued, general purpose credit cards has fallen significantly during the past year. “This deleveraging,” says the company, “is believed to be due in part to charge-offs in the higher risk segments of the population, more conservative spending in the low-risk segments, and significant efforts by consumers across the board to maintain the health of their credit card relationships as a financial cushion.”

TransUnion says “consumers with higher incomes were just as likely as consumers with lower incomes to suspend their use of this payment option.”

“In 2009,” says TransUnion’s Ezra Becker, “well over 70 million consumers did not have an active, general-purpose bank issued credit card. During the course of one year, more than 8 million additional consumers joined these ranks, making it one of the fastest growing consumer segments. Consumers who do not have or use bank-issued, general purpose credit cards still have a need for other payment vehicles, a fact which is beginning to attract significant attention from credit and debit providers alike.”

Mortgage Ratios

Credit card debt is one of the factors considered when individuals apply to finance or refinance real estate. Lenders look at the “front ratio” and “back ratio” when qualifying borrowers. The front ratio includes the monthly cost for mortgage interest, mortgage principal, property taxes and property insurance — also known as PITI. The back ratio includes the front ratio plus regular monthly costs such as student loans, car payments and credit card obligations.

For instance, FHA guidelines allow ratios of 31/43. If the Smiths earn $6,000 per month before taxes it means that as much as $1,860 can be used for housing costs (the front ratio) while $2,580 can be used for housing costs plus monthly obligations.

In this example, the Smiths can spend as much as $720 per month on consumer debts ($2,580 less $1,860). That’s not a lot when one figures the cost of auto debt, student loans and such.

No Use – But Rising Balances

Credit card interest continues to accrue on outstanding debt whether or not a card is used. To lower monthly costs consumers must take two steps to get ahead: First, reduce if not pay off existing credit card balances. Second, not borrow from other sources such as checking account lines of credit.

Discontinuing the use of credit cards can also be important for another reason: Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 credit debt is not forgiven if you spend $750 or more in the 70-day period before seeking bankruptcy protection.

Other Findings

For the third quarter of 2010 TransUnion also found:

• The incidence of credit card delinquency was highest in Nevada (1.28 percent), followed by Florida (1.09 percent) and Mississippi (1.06 percent). The lowest credit card delinquency rates were found in North Dakota (0.48 percent), South Dakota (0.53 percent) and Nebraska (0.56 percent).
• Only two areas showed an increase in credit card delinquency — the District of Columbia (19.67 percent increase) and Mississippi (1.92 percent increase). The two areas of the country with the largest quarter-over-quarter drop in delinquency were Alaska (-19.2 percent) and Nebraska (-17.6 percent).
• National average credit card borrower debt (defined as the aggregate balance on all bank-issued credit cards for an individual bankcard borrower) edged upward for the first time in six quarters by 0.28 percent to $4,964 from the previous quarter’s $4,951, but down 11.54 percent compared to the third quarter of 2009 ($5,612).
• The highest state average credit card debt remained in Alaska at $7,159, followed by Hawaii at $5,716 and North Carolina at $5,640.
  The lowest average credit card debt was found in Iowa ($3,807), followed by North Dakota ($4,103) and South Dakota ($4,196).
• All but 15 states showed an increase in average credit card debt from the prior quarter. The largest increases in average credit card debt over the previous quarter occurred in West Virginia (2.81 percent), Wyoming (2.2 percent) and Hawaii (2.19 percent).
• On a year-over-year basis, national credit card originations increased for the first time since the recession began in late 2007. Only nine states showed decreases in originations since the third quarter of 2009. The states with the greatest year-over-year increases were Delaware (21.3 percent), Oklahoma (16 percent), and Pennsylvania (15.8 percent).
• The areas with the steepest declines in year-over-year credit card originations were the District of Columbia (-10.3 percent), Minnesota (-9.6 percent), and Michigan (-4.2 percent).
• As credit card delinquency trends differ between the national and state economies, metropolitan areas can also show different credit dynamics relative to the state level. Approximately 77 percent of metropolitan statistical areas (MSAs) showed a decrease in their 90-day credit card delinquency rates since last quarter, which is generally consistent with national trends.
• The area with the largest drop in delinquency since the last quarter was the Dubuque, Iowa Metropolitan Statistical Area (-48.4 percent). The area with the largest increase in delinquency since last quarter was the Lewiston, ID-WA Metropolitan Statistical Area (92.7 percent).

8 million consumers drop credit cards, improve mortgage standing is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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New rules from the Federal Reserve will make it more difficult for lenders to charge overdraft fees — you’ll now have to opt-in to pay over-the-limit fees. This means lenders will have to get your agreement to charge you each time you overdraw your account.

OR

You can elect not to opt-in in which case you will simply not be able to borrow above your credit limit. This means if you go to a store, buy stuff, and don’t have enough credit you will be unable to complete your purchase.

This, after all, is the way it should be. If you have $20 in your wallet you can’t buy things worth $30.

Some lenders charge multiple over-draft fees and some charge fees which are many times the value of the overcharge — say a $39 fee for a $5 overcharge, or a string of four fees per day for each day the account is overdrawn.

The Bank of America has elected to drop the overdraft fees entirely and to simply say that your credit limit is your credit limit. Fair enough and good for BOA.

Mortgage Applications

The implications for mortgage applications are important. If there’s no ability to overdraw your credit card account you cannot face overdraft fees. No less important, you cannot have a negative item on credit reports as a result of an over-draft — and that means credit scores for many people might actually rise.

Two cautions: First, check your credit limit each month to assure that you will not be embarrassed at the check-out counter or in a restaurant.

Second, the Bank of America decision is a voluntary move — one that could be reversed in the future. Other lenders still seek to have you pay through the nose. For this reason it’s important to assure clarity in the credit system and that can be done most effectively by outlawing overdraft fees altogether.

Mortgage Qualifying Improved With Credit Card Change is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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The VA mortgage program is the single best form of real estate financing available because qualified individuals can purchase with nothing down and there’s no annual mortgage insurance premium.

Qualifying

To get a VA loan you must be able to demonstrate qualifying federal service. Since 1990, according to the Veteran’s Administration, you must have:

• Completed 24 months of continuous active duty or the full period (at least 90 days) for which you were called or ordered to active duty, and been discharged under conditions other than dishonorable, or
• Completed at least 90 days of active duty and been discharged under the specific authority of 10 USC 1173 (Hardship), or 10 USC 1173 (Early Out), or have been determined to have a compensable service-connected disability, or
• Been discharged with less than 90 days of service for a service-connected disability. Individuals may also be eligible if they were released from active duty due to an involuntary reduction in force, certain medical conditions, or, in some instances, for the convenience of the Government.

Active Duty Service Personnel

If you are now on regular duty (not active duty for training), you are eligible after having served 181 days (90 days during the Gulf War) unless discharged or separated from a previous qualifying period of active duty service.

Selected Reserves or National Guard

If you are not otherwise eligible and you have completed a total of 6 years in the Selected Reserves or National Guard (member of an active unit, attended required weekend drills and 2-week active duty for training) and

• Were discharged with an honorable discharge, or
• Were placed on the retired list, or
• Were transferred to the Standby Reserve or an element of the Ready Reserve other than the Selected Reserve after service characterized as honorable service, or
• Continue to serve in the Selected Reserves

Individuals who completed less than 6 years may be eligible if discharged for a service-connected disability.

You may also be determined eligible if you:

• Are an unremarried spouse of a veteran who died while in service or from a service connected disability, or
• Are a spouse of a serviceperson missing in action or a prisoner of war

Note: Also, a surviving spouse who remarries on or after attaining age 57, and on or after December 16, 2003, may be eligible for the home loan benefit. However, a surviving spouse who remarried before December 16, 2003, and on or after attaining age 57, must apply no later than December 15, 2004, to establish home loan eligibility. VA must deny applications from surviving spouses who remarried before December 6, 2003 that are received after December 15, 2004.

Eligibility may also be established for:

• Certain United States citizens who served in the armed forces of a government allied with the United States in WW II.
• Individuals with service as members in certain organizations, such as Public Health Service officers, cadets at the United States Military, Air Force, or Coast Guard Academy, midshipmen at the United States Naval Academy, officers of National Oceanic & Atmospheric Administration, merchant seaman with WW II service, and others.

Loan Limit

The VA Loan limit is generally set at $417,000. However, the amount available to qualifying military personnel may be higher in selected “high cost” counties and in Alaska, Hawaii, Guam and the Virgin Islands. (In some areas loans for as much as $1,094,625 are available.) Check the loan limits page for the latest information.

The VA Funding Fee

The government guarantees the loan’s repayment to a lender, an incentive that greatly benefits borrowers because lenders will finance a home with little down if a borrower is backed by VA insurance.

To obtain a VA-insured loan it follows that one must pay a premium called a funding fee equal to 2.15 percent of the loan amount for regular military personnel. There’s no annual insurance premium with the VA loan program, just the one-time charge upfront.

If you borrow $150,000 and pay an upfront funding fee of 2.15 percent the cost will be $3,225. This fee can be financed with the mortgage, meaning you do not have to pay it in cash at closing. Instead, the upfront funding fee is added to the loan amount.

Be aware that there may be different funding fees for National Guard and Reserve personnel and that the funding increases if the VA loan program is re-used. For specifics, speak with a VA counselor or with a lender.

How To Get Started

The first step is to complete VA Form 26-1880. This is a Request for a Certificate of Eligibility. Once completed, says the VA, “send this form to the Winston-Salem Eligibility Center, along with proof of military service. In some cases it may be possible for VA to establish eligibility without your proof of service. However, to avoid any possible delays, it’s best to provide such evidence.”

Lenders can also help you establish eligibility through what is known as the WEB LGY online system. This system is quicker then using the VA form.

How Much Can You Borrow?

Lenders qualify borrowers in part on the basis of their income. In general terms, under the VA program no more than 41 percent of your gross (pre-tax) monthly income can be used for housing costs such as mortgage principal, mortgage interest, property taxes and property insurance (PITI). As much as 41 percent of your income can be used for PITI plus recurring bills such as credit card payments, auto loans, etc. These numbers are sometimes expressed as 41/41.

Let’s imagine that you have two household members with a combined income of $90,000 annually or $7,500 per month before taxes. Under general VA rules, the buyers would be allowed to spend as much as $3,075 on housing costs (PITI) and as much as $3,075 for all regular monthly debt.

Notice that the debt-to-income ratios for the VA program are the same for both PITI and PITI plus other debts. In other words, if you keep down your spending for cars loans, credit cards, etc., then you can qualify for a bigger mortgage.

Shop Around

Every VA loan has the same terms (length, no prepayment penalty, etc.) as every other VA loan. What may not be the same is the cost: Different lenders can and will change different combinations of interest and points so it pays to shop around and compare rates. One of the best ways to compare loan offers is to ask lenders to provide a quote with “par” interest — the rate with zero points.

How To Apply

In recent years the loan application process has been greatly simplified, however proper information from borrowers is still required. Just take these steps:

• At least three months BEFORE you finance or refinance real estate get a copy of your credit report. The reason to do this is to check and see if there’s any information on your credit report which is factually incorrect or out-of-date (most negative items can stay on a credit report for seven years, 10 years for a bankruptcy). You can get a free credit report with no strings attached by going to AnnualCreditReport.com.
• Get your paperwork in order. Have in hand your last three pay stubs, your last three tax returns, and statements for all savings and checking account, mutual funds, retirement accounts, credit cards, student loans, car loans, etc. Make a file and stick the paperwork in it. You want to show ALL income and you must show ALL debts. When in doubt add it to the file.

• Ask some questions: Do you expect to receive “bonus” income now or in the future? Do you expect to receive “overtime” income now or in the future Will “other” income in addition to your salary continue at current levels? If you own your home and use it as a prime residence, what’s the estimated fair market value? What’s the value of all financing now secured by your current home if you’re refinancing?

Seller Contributions

Because it’s tough to sell home these days in many markets, some owners are willing to pay some or even all buyer closing costs. VA rules allow so-called “seller contributions” of as much as 3 percent to 6 percent of the purchase price to help offset closing costs, depending on the amount you put down. A seller contribution may be used to offset various closing costs AND the downpayment under the VA program. Speak with your real estate broker and VA lender for specifics.

Gifts

Gifts are allowed under the VA program and gifts may be used to cover some or all of the downpayment. A “gift letter” from the donor will be required. This is a letter which says the money given is really a gift and that no repayment or interest will be sought. Speak with lenders for specifics.

Important Points

___ You do NOT need a co-borrower to apply for a mortgage. However, the additional income represented by a co-borrower may allow you to obtain a bigger mortgage.

___ If you own rental property, lenders will generally add back the depreciation deducted each year on “improvements” such as a house, but not stoves, clothes washers, etc.

___ You are NOT required to disclose the receipt of alimony, child support payments or separate maintenance to a lender. However, disclosure of the additional income represented by such payments may allow you to borrow a larger amount.

___ In addition to the minimum down payment, you may and are likely to have other closing costs as well. Such additional costs can include prepaid expenses, points, mortgage insurance premiums paid in cash, non-realty expenses, taxes, title insurance, transfer fees, settlement charges and miscellaneous costs. Always obtain a Good Faith Estimate from any lender who offers you financing. This government-mandated form outlines the loan-related costs you will be required to pay at closing.

VA Mortgage Basics is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Answer: Yes.

You MUST tell lenders about all outstanding debt and payments. In the case of an auto loan or other installment debt, some loan programs will not count the debt against qualifying ratios if there are only six to ten payments remaining.

Please speak with lenders for details.

Can Mortgage Lenders Ignore My Monthly Auto Costs? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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For details, speak with loan officers.

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You MUST, of course, report auto debt and all debts when making a mortgage application. The decision regarding how to count such debt depends on the qualification standards for individual loan programs.

Speak with lenders for details.

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For details and required paperwork, speak with loan officers. Be sure to ask about verification requirements.

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•  Allow overtime income if regular and expected to continue.

•  Dump the old five-year test for income stability.

•  Accept part-time income if regular and expected to continue.

•  Child care expenses not counted as a debt

•  It’s okay to use “mattress” cash for closing — that is, accepting cash from individuals who do not have accounts with banks, S&Ls, etc. in certain instances.

•  Allow some flexibility with 31/43 guidelines.

•  Two months of bank statements instead of three.

•  Lower up-front costs for the Mortgage Insurance Premium (MIP).

For details, speak with lenders regarding your specific situation.

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This means that if you do not owe money for credit card bills, auto payments, and other monthly debt, up to 41 percent of your monthly income can be used to buy a home. This high qualification ratio plus nothing down makes the VA program one of the best available for those who wish to buy as much house as possible for a given income.

VA lenders will generally loan up to the conventional limit with nothing down. However, with cash in the deal, or with equity when refinancing, larger loan amounts may be available.

The VA program is enormously buyer-friendly — the idea is to help people with appropriate federal service. If you have such service, be certain to speak with lenders and brokers regarding the latest loan qualification standards.

What are the basic VA financial qualification standards? is a post from: OurBroker.com -- Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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