otherwise stellar credit report will help a lot, but chances are good that if a person has had a vehicle repossessed, the rest of their credit report is likely shaky as well.
Self-Employed Status
A self-employed buyer transaction is always challenging. Self- employed buyers will have their tax returns especially scrutinized, so a good lender will ensure that the self-employed borrower has clean tax returns for at least the previous two years. The lender must check the borrower’s tax information in order to ensure that the income requirements match. This is because self- employed individuals will often take advantage of tax deductions which results in a smaller perceived income. As a result, they have a much harder time getting a loan. If the borrower has been self-employed for only a short time (less than two years), it is extremely difficult to get approved for a loan.
Payment Shock
Another issue to mention that plays some part in loan underwriting decisions is called “payment shock.” This is when, despite the best intentions and careful planning, a new homeowner is surprised to find that their new living expenses are far greater than they had anticipated. A good loan officer and underwriter will try their best to figure this out ahead of time. However, it’s easy to overlook certain future expenses. For example, perhaps the borrower/buyer has an advantageous rental on a small apartment and pays $800 a month and has an annual income of close to $100,000. The buyer (and the lender) knows they can easily afford an $1800-per-month mortgage payment. But living in a rented apartment doesn’t involve other costs that they now will be responsible for, like homeowner’s
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