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Miscellaneous Mortgage Questions

Well if you’re reading this, you’re officially on the mortgage road less travelled. Not everything with getting a mortgage is based on black and white guidelines. Fortunately we see people, homes, and loans in beautiful color and specialize in uncharted territory…so throw out the cookie cutter formulas and let’s get weird. Here are some off-the-beaten-path mortgage questions that we’ve answered for others:

How does recasting a mortgage work?

Recasting occurs when you’ve made large principal payments towards your balance, and now you want the amortization schedule to be recast, so your payments are lower.

If my income declined, but I was still able to make my mortgage payments, is there a possibility of losing my home?

No, you’re going to have that loan as long as you continue making the payments on time.

Can I buy a home in a new city, before getting an offer letter, IF I’ve only been working a few months in my current job?

You would either need to have an offer letter from the new employer in the new city in order to qualify for the new house or IF you had enough income to qualify, get the home in the new city as a second home.

Can paid off loans count as tradelines for a conventional mortgage?

Fannie Mae and Freddie Mac do not have a minimum number of open trade lines requirement. You can have loans that have been paid off and only have one active trade line and still get qualified for a mortgage. Your loan officer would need to run your loan through either Fannie Mae or Freddie Mac system and get an approval, but having only two open trade lines will not disqualify you.

What determines if I can do a cash out refinance for my FHA loan while lowering my rate and getting rid of mortgage insurance?

You may be able to refinance out of your FHA loan into a conventional loan. And assuming you have at least 20% equity, you would be able to get rid of the private mortgage insurance. Depending on your credit score and other factors, you may be able to lower your rate, but when you pull cash out on a conventional loan, there is an interest rate adjustment that increases the rates. So you’ll want to talk to your loan officer about your situation.

When I submit my bank statements to a lender what kind of info are they looking for?

It’s not a problem that you don’t receive paychecks during the summer since the underwriter will request a verification of employment and confirm your annual pay.
The fact that you get paychecks from the babysitting gig is fine. The underwriter might ask for copies of the checks depending on the amounts.
Normally you need to paper trail any large deposit outside of payroll. Some things the underwriter may look for on a bank statement would be non-sufficient fund charges, large deposits that appear to be cash, or liabilities. For instance, ACH payments on liabilities that might not be on your credit report.

Can I get a mortgage with a discharged Chapter 7 Bankruptcy?

Unfortunately, conventional financing requires four years from the discharge date. You could try FHA, which only requires two years seasoning from the discharge date. Outside of that, non-QM would be your only option.

How much time at a job is needed to use it’s income towards qualifying for a mortgage?

Good for you for taking some time off. Most banks will want to see six months back on the job to consider the income stable and used for qualifying purposes. If there’s no gap in employment, for instance, you resigned from one job and take another offer, there is usually no requirement on a length of time with that employer. So you can go get a mortgage that same week as long as you have a signed offer letter from the new employer.


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The Turnkey Foundation, Inc. d/b/a Arbor Financial Group is an Equal Housing Lender. In all jurisdictions, the principal {NMLS: 236669} licensed location is 2932 Daimler Street, Santa Ana, CA, 92705. {Julie Aragon MLO #250691}