Paying alimony, and can’t seem to qualify?

The Story: Jay Tolisano received a call from a potential home buyer to purchase a single-family home. The buyer was having a tough time qualifying because he was paying alimony to his ex-wife and that was hurting his qualifying ratio. Every loan program has a maximum debt to income ratio. The debt to income ratio is simply the customers overall credit debts on their credit report, alimony/child support (if applicable), and total housing payment compared to their gross income.

Tolisano started the application process and pulled the pieces of the puzzle together, asked all the important questions, and uncovered the data he needed.

Now, when an obligation like alimony, usually a significant figure, is charged as a debt vs. being deducted from the borrower’s income the result in the qualifying ratios is HUGE. Charging the alimony as a debt typically makes it tough to qualify.

In this case the difference in the total debt to income ratio used to qualify was well north of the eligible guidelines (when alimony was charged as a debt) vs. being under the allowable guideline at 35% (when alimony was deducted from income).

The Solution: Tolisano’s firm, CrossCountry Mortgage works with many lenders, some of which allow  the alimony to be deducted from income vs. the typical standard underwriting guidelines that require the alimony to be charged as a debt. In addition, this client was able to buy a home using a jumbo loan with less than 20% down and avoided payment private mortgage insurance.

The devil is always in the details. When Tolisano gets a call from any homeowner, even if they say they were once declined elsewhere he always takes a shot, as his goal is to help the clients succeed.

There is always a story, and if you dig deep, ask the questions and listen there is likely an answer and solution.