For young families who are looking to make a home purchase, be aware that your credit score is not the only item potential lenders are looking at.
Valerie RumboughA recent article in the New York Times suggests that expectant parents may have a harder time getting a loan, due to the fact that the mother will be out of work for maternity leave. Even if the mother plans to return to work in a few weeks, the lender may not accept that, and may require that either the loan be approved based solely on the father’s income, or that the couple reapply for a loan after the mother returns to work.
Lenders these days are looking for guaranteed income, and may require proof that you will be employed at the same or higher salary for at least the next three years. Many times, the expectant mother anticipates receiving disability income while out. However, the mortgage companies look at this as only temporary income that will not last three years, thus it may not be sufficient to qualify for the loan.
Fannie Mae and Freddie Mac loans also now require that employment is verified right before the closing date, even if it had been verified before. So, if you are expecting, you may want to either wait until after returning to work to apply for a loan, or, if you are going to get a full salary while out due to unused vacation and/or sick time, a statement from your employer may suffice. Planning is the key to being successful in this situation.
– Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at 800-723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.