Wednesday Jul 06, 2022
Wednesday Jul 06, 2022
On Episode 180 of THE Amicable Divorce Expert podcast we interviewed Mona Elhalwagy, JD, NMLS: 663069 is a mortgage broker with Forbix. Mona lays out the formulas to use to provide a mortgage for Moms especially, if Mom is the lower wage earner and wants to keep the house.
What does a mortgage broker do? Brokers go to mortgage companies to find funding. These mortgage companies do not promote themselves to the public, just to mortgage brokers.
We discuss a number of different situations to help Mom get a mortgage, or refinance the mortgage in her name solely.
- Mom reenters the workforce to qualify.
- Mom takes in renters.
- Mom gets significant financial assets in the divorce settlement enough to get a mortgage.
- Mom receives child and spousal support.
Here is the guideline:
- In order for alimony or child support to be considered as acceptable stable, income, it must continue for at least three years after the date of the mortgage application. To be considered stable income, full, regular, and timely payments must have been received for six months or longer.
- Income received for less than six months is considered unstable and may not be used to qualify the borrower for the mortgage.
How much to qualify for a $300k loan? Assuming the following:
- $600k value
- Good credit score
- A car payment of $250, $100 for property insurance, $400 in property taxes and a 3.875% rate
- Need to make about $4400 a month
- Lenders want to make sure that the mortgage and minimum monthly debt is less than 50% of the gross income
- Asset Depletion is a method of calculating a monthly income stream based on a borrower’s assets
- In general, Checking accounts, savings accounts, mutual funds, bonds, trusts, public stocks, CDs, cash value of life insurance and retirement assets are eligible.
- Different lenders use different formulas to convert the assets into monthly income. Some will take the assets and divide the by 84 months. Others use an amortization schedule based on the client’s age.
- For example, if a client has $1 million of assets/ 84 months, that equals about $11,900 of monthly income and the assets can stay in the account.
Alternatives for self-employed clients
12 months Bank statements – flexibility in using personal or business statements
Pure stated income for owner occupied homes
- Only use the equity in the property. Rate is generally higher, but interest only is available.
- Very few lenders have this product because most lenders need to show an “ability to repay” when it’s an owner occupied home. This is a good alternative to private money loans.
Stated income loans for investment properties
- If the community has investment property, it is generally easier to qualify for investment property because lenders can look to the rents received to qualify the client for the loan
- Have a product where the rents just need to cover the mortgage, taxes and insurance payments. Interest only payments are also available.
How lenders look at income
Alimony or child support
In order for alimony or child support to be considered as acceptable stable, income, it must continue for at least three years after the date of the mortgage application. We will accept as verification that alimony or child support will continue to be paid with a copy of the divorce decree, or separation agreement if the divorce is not final
Document no less than six months of the borrower’s most recent regular receipt of the full payment.
This is good to know in terms of structuring support. For example, if support will continue for 5 years at a higher amount, perhaps structure the settlement so that it continues at a higher amount for 3 years, if possible.
A minimum history of two years of employment income is recommended. However, income that has been received for a shorter period of time may be considered as acceptable income, as long as the borrower’s employment profile demonstrates that there are positive factors to reasonably offset the shorter income history.
Part time income
Part Time Income can be considered for use in qualifying as long as the Borrower has a two (2) year history of receipt but no less than twelve (12) months (subject to underwriter discretion). As far as re-entering the workforce, the Underwriter will need to review the Borrower’s prior employment history for the two (2) years prior to leaving the workforce
Staying on title if on mortgage
Some people think that if they remove themselves from title, that they are also off the loan. This is not the case. Being on title is what gives your rights to the property, like being able to sell or refinance the property. Being on the loan just means that you are liable for the mortgage payment. When your spouse refinances the house, it is best to coordinate with escrow to remove yourself from title. This way, you will be removed from title simultaneously when the loan is funded and records
A Stipulation and Order can correct the monthly amounts for child and spousal support if the settlement agreement doesn’t meet the requirements for the length of time that Mom has to receive child or spousal support to get the mortgage. The overall amount of money can remain the same for spousal support while the monthly allotments can be diminished to be over a longer period of time in order to meet the mortgage requirements.
BIOGRAPHY for Mona Elhalwagy, JD, NMLS #663069
Mona Elhalwagy started her career in lending more than 15 years ago as a wholesale lender.
One of her responsibilities was to educate brokers on loan products and how to structure loans. This allowed her to pre-underwrite files before they were submitted to maximize the likelihood of approval.
While working in lending during the day, Mona went to Loyola Law School in the evening and graduated in 2001. After graduation, she stayed in lending because she liked the fast-paced environment and had a passion for how financing works. Mona is a proud member of the California Bar Association.
At Forbix, a loan brokerage firm, she offers all types of loan products for residential and commercial properties. She has a passion for listening to her client’s situation, understanding their goals, and finding the suitable loan product for their needs. It is her vast variety of loan products and industry knowledge which allow her to accomplish this for her clients.
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