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Congrats on your new baby! The fact that your wife is out on maternity leave does have a bearing on your application. Simply put, in order for most lenders to consider income stable, there is a minimum requirement that a borrowers employment and income stream is likely to continue for a 3 year period. Although your wife is out for what most would say is a temporary time frame the use of short-term disability to help qualify you for this refinance is very doubtful. In order to use income from your wife, she would have to return to work either full or part-time, and show the receipt of a paystub after finishing her maternity leave. I hope this helps answer your question! Happy new year!
Thanks for your question. To be better able to serve your questions and needs a lender would need additional information. The big factors will be the same as in any mortgage.
LTV – Loan-to-Value, How much you are borrowing vs. how much your home is apprasied.
DTI – Dept-to-Income, Your expenses for mortgage, autos, boats, credit cards, etc. vs. your documented earnings. This is usually capped at 40%. If you need to go FHA letters of documentation from employers may help you.
Credit Score, The better your scores the better your chances.
Refinance for mortgage balance or Cash out, Mortgage balance is best.
Regardless of what you may hear or read plenty of companines are lending mortgage money if it makes sense.
The best thing you can do is to talk with a professional and make decisions from that point. Remember to get everything in writing and be comfortable with the folks you are dealing with.
This should not be a problem with most lenders. What most lenders will ask for at this point is a letter from your wife’s current employer stating she will be returning to work with the expected return date on the letter. You will more than likely also need to send in the pay stubs that she is receiving from the short term disability.
The lender should calculate your debt ratio (gross income to debt being paid out) with an average of both yourself and your wifes income for a 12 month period. If the debt ratio is at 45% or less you should be ok getting your loan approved.
Finding a loan officer in your area and tell them your situation. They should be able to tell you what the lender will require to get your loan approved.
I can only guess you are asking this due to needing her income to qualify, otherwise it has no material impact on your refinance. If you do need her income, this will present a problem for you until she has a back to work date established.
All income must have a probability of continuance for at least three years to be considered stable and effective. Any income that does not satisfy this requirement will not be considered for underwriting purposes, but may be considered as a compensating factor. Short term disability, income derived from a temporary job, unemployment compensations and second jobs without two years of work history all fall in to this category.
Once your wife has a return to work date established, you could apply for the refinance and disclose your situation. Provide your LO with the doctor’s note, or statement from the disability insurance company with her return to work date and a contact within her HR department. You will be all set, but most lenders will not allow you to close the loan until she does return to work. Some may even require her to produce one pay stub prior to closing.
In today’s ever tightening lending guidelines you’re going to have a tough time. Typically income is looked at and considered if it is “likely” to continue. The problem you’re going to have with short term disability is that it’s just that, short term. The “likely-ness” of continuance is pretty clear and wouldn’t be considered for qualifying purposes.
On the other side and this will depend on the underwriter (every company is different to a point) is the possibility to use your wife’s income when she goes back to work. If the employer will confirm her position and income (salary or guaranteed hours) then it may be possible to use this income. It’s going to require a full clearance for the short term disability because of the risk she never goes to work but still worth talking about if you need to purchase before she’s back full-time.
In today’s market I would say you’ve got a 70/30 chance to qualify if you can provide all the above info and everything else is in line.
We are looking to refinance our mortgage. Looking for a 30 year fixed to 5% or under. The question I have is that we just had a baby, and my wife is out on maternity leave. She actually is receiving short term disability because she had minor surgery as a result of her pregnancy. She is planning on returning to work in a few months, but curious how this affects our application. So technically we are receiving income. How do we disclose this honestly, with getting the best loan possible?
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