Central NJ, NJ · Member since 2014 · 8 posts · 2 votes
I'd like to get some input on my current situation before moving forward in meeting lenders for my first purchase which would be an owner-occupied multi-family house.
Early last year I got into a Union which operates as a "Hiring Hall" and I've been told that this is considered temporary employment which means that my income will be averaged over last 2 years rather than current salary.
Over the past few years my gross income has nearly doubled yearly. Using simple and easy numbers lets say $20k in 2012, $40k in 2013 and $80k in 2014.
Using these numbers my current averaged income would show $30k, but if I waited it would show $60k.
First, are there any other factors involved with "Temporary Employment"?
Secondly, assuming I could qualify with current averaged income should I go ahead or would it be wise to hold off and wait until after I file 2014 and can on paper show this increase? How big of a difference would it make and on what (Mortgage Rate, Amount, or both?)
The mortgage rate will continue to vary with time and your credit score but the mortgage amount will vary based on your debt to income (DTI). If you make more in the future, you will be able to get a higher mortgage in the future too but the mortgage rate could be lower or higher.
Unless you have an actual fixed "salary", your income will normally be averaged over 2 years. However depending on your credit, it's possible to get a loan through Freddie using just your 2013 income reported on taxes.
You may also find a lender who will factor in a portion of the income from the new property (probably 75%). Your income will not affect your rate, that's more dependent on your credit. How much of a loan do you need? That might give you your answer right there. I'd find a mortgage broker and talk to them. You don't have to do a full-on application, just find one who will discuss your situation with you and see what they suggest.
Thanks all for the responses, I think I will try and find a broker to sit down and talk about it without running my credit (Perhaps printing out my Annualcreditreport.com reports and bringing them?) . It is good to hear that rates themselves are more based on Credit Score than income as my Credit is fairly good. The reason I was hesitant to speak to a broker is that if it turns out to be better to wait than I did not want credit checks from now to effect me in 6 months or so when I did go ahead and move forward.