Do mortgage lenders take local demand for your occupation into account when evaluating your application?

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My husband and I would like to buy a house by June of 2009, when our current apartment lease expires. With the national economy tanking we’re worried that we may not get approved simply because my husband will only have a year of full-time salary history.

My husband is a first year software engineer for a small (but well established and carefully managed) defense contractor whose biggest customer is NATO. We live in Huntsville, Alabama; a hot bed of high tech jobs primarily in the aerospace, electronics and defense industries. The city actually has the 3rd highest concentration of software engineering jobs in the country, behind Boulder, Colorado and Silicon Valley. The city’s economy is relatively strong yet has a very low cost of living. My husband graduated from college in May of this year and currently makes a starting salary of 50K a year. He’s only been on the job for 3 months but has made himself virtually indispensable to his boss. The company is working on an addition to their product that only he has the skills to implement so his salary is expected to rise at least somewhat during the company’s annual evaluations this winter.

We don’t want to borrow much in relation to our income. I was doing some research on the local real estate market and the type of properties we’re interested in (3 bedroom ranchers under 1500 square feet on 1/2 to 1 acre lots outside the city) have an average asking price of $ 110,000 and aren’t selling very well. Most of the houses I found in online listings were completely vacant, which means more negotiating room for me. I’m hoping to find someone ultra desperate to sell and get them down to $ 90,000 or even $ 80,000.

Our credit score is around 720 and our debt primarily consists of low interest student loans and a small loan for the motorcycle my husband uses to commute to work, which we plan on paying off soon. We have a fair amount of money in savings and try to save 15 to 20% of our take home pay

We’re eligible for multiple first-time buyer programs in our state but I’m getting a little anxious about qualifying for the loan. We really want to get out of apartments because every time we rent we’re cursed with a smelly and/or noisy neighbor.

  1. Reply
    February 1, 2011 at 2:55 am

    lol..about your “curse”.

    It seems you & HB are in great standing to qualify for a home-loan, except the employment history…The problem I fore-see is, it takes time to get the application for financing filled out & approved, so if you are waiting until your HB has a year into his job (about the time your lease is up?), you still have that waiting period for financing, finding the home you want, negotiating the price, closing. – It’s a process.

    It doesn’t hurt to call/talk to a real estate agent, tho, (without any obligation to use them) and ask for their advice on your situation. – Maybe you can start the paperwork earlier and “get the ball rolling”. (But, getting everything finalized before your lease is up, sounds difficult.)

    If anything, tho, you can probably get by with renting your apt. month-by-month until your get into a house. – No having to resign a long lease.

  2. Reply
    February 1, 2011 at 3:24 am

    Times were a bit different when I did this, 1997, but I was willing to put 20% down and I was just out of school. I mean that literally, I had a job that I was about to start and an offer letter from the company but hadn’t been paid even one time. Under these conditions I was able to get a conventional fixed rate loan with a good interest rate. Bottom line, if you have good credit and some money to put down I think you’ll get a loan.

    Find a good, reputable, honest (not necessarily top producing) real estate agent who can point you in the direction of a good load person. This may seem counter intuitive but in most places it is not legal for real estate agents to take kickbacks from mortgage brokers. So, if an agent recommends one it is usually one that actually can close deals and that doesn’t screw over clients. Also, honest agents will tell you when the deal you’re getting from your mortgage broker seems bad. I’ve had this happen several times with clients, but never with the mortgage guys I recommend. Mostly, probably, because they know that if they do that I’ll never send them business again.

    Good Luck

  3. Reply
    February 1, 2011 at 4:12 am

    It is to my understanding that they can count his school as part of his employment. When I went to get pre approved, I had a little over a year at my current job, but the broker counted my 4 years of school as part of my current employment because it was relevant to my job. So I actually had 5 years at my current job according to the loan application. I’m not sure if that is common practice, but she said it was absolutely fine. We saw Debbie at CountryWide (I live in Huntsville too, btw. I don’t know where you were planning to go get preapproved, but if you want to try her, you can email me if you want to know her last name, I can’t remember it right now.)

  4. Reply
    Ed Atun
    February 1, 2011 at 4:40 am

    Lenders do take the local demand into consideration when they are evaluating a loan. It is one piece of the puzzle..

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