Mortgage Qualification Woes!

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John_Ottawa

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My ex has agreed to a lower payout so i can continue to keep the family home. However, I have to now re-qualify for the mortgage on my lower income after CS and SS. Fine that all makes sense although she didn't bring anything into the home financially while we were married my expenses for SS and CS do have to be taken into consideration.

However, If i deduct the SS and CS payment from my gross income as if i was just making less and THEN calculate my mortgage, taxes, heat costs etc. I'd qualify no problems for what i need.

BUT they don't do it like that the bank says that my SS and CS payments are technically debt payments so they deduct those from my gross income which means i no longer qualify as my debt to income ratio is too high WTF ?!?!

I give up !! :confused:
 
Everyone loses in a divorce. Many people have to move and lower their standards of living. You are fortunate if your credit rating has remained in tact. You may have to sell and get something less expensive.

You could try going through a mortgage broker.
 
Even on a good salary and no debt the numbers make it impossible to get a mortgage as the ratio calcuation is too high. I've been paying for almost 18 months but apparently i can't afford it and don't qualify utter BS *sigh*
 
yeah it sucks big time.... I know mortgage brokers sometimes can put deals together. You don't pay higher interest rates and do go through reputable lenders (even banks that have turned you down). These brokers get commission from the lenders and sometimes can work miracles. Check it out.
 
I'm a Mortgage Associate (aka broker under old regulations).

You will find the same problem with a Mortgage Associate...all lenders treat court ordered SS and CS the same - as a debt expense.

...add to this the changes in the mortgage industry by the Bank of Canada as of the end of June this year :(

You don't mention how much you are having to pay your ex out.

However, off the top of my head, just wondering if you checked if:

1. you are able to "assume" the exisiting mortgage as is from the financial institution that holds it?

2. if the amount you need to pay your ex in equalization from the home can be paid via a personal loan?

3. if #2 is an option...is your ex willing to sign a letter stating they sign over the house to you and you can then deal with the issue when your mortgage comes up for renewal? Hopefully this will allow you time to qualify on your own and you can, at that time, roll the loan into the mortgage.

BTW...many people who qualified for their mortgage prior to June 30th would never qualify today! Dropping the maximum amoritization from 30 to 25 years makes a huge difference not to mention the lowering of the debt to equity ratios, and the increase in credit score that are also needed to qualify in todays market!
 
Ouch.

Under the same thinking, when one parent is paying full cs: banks should also treat the receiving parent's table amount as debt payment. That is, their income should not include the whole amount of CS they are receiving, but should have their own table amount subtracted.

Taking it one step further, they should also treat the table amount corresponding to a married couple's combined HH income as debt payment.

Bank is treating children as debt in some situations but not others?
 
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dinkyface said:
Ouch.

Under the same thinking, when one parent is paying full cs: banks should also treat the receiving parent's table amount as debt payment. That is, their income should not include the whole amount of CS they are receiving, but should have their own table amount subtracted.
Click to expand...

The banks DO do this ... if you receive CS the banks won't consider that as monthly "income", however they WILL consider SS. I just went through this in January ... I do get CS but no SS and I even though I have a court order and ex has paid faithfully for almost 10 yrs (CS), the banks would not count it as "income".
 
DunnMom said:
even though I have a court order and ex has paid faithfully for almost 10 yrs (CS), the banks would not count it as "income".
Click to expand...

That is interesting (and useful info). My ex has obtained a significant mortgage at one of the big-5 (no cosignee) .. and in the previous year received daycare subsidy.

So would you say that CS income had NO bearing on your mortgage application? Were the kids older e.g. nearing 18?
 
CS is for the children and SS is for the spouse. It makes sense that, as frustrating as it may be, in receiving CS you also have a financial responsibility that consumes that CS, namely, your child.

Crazy system we have as everyone has to pay for a place to live - rent or own.
 
If the bank failed to take CS into consideration, then I would either ask it to be reviewed by someone more senior OR go to another bank. CS is no different than SS - it's mandated income. Arguably CS is even BETTER since its nontaxable.

I really don't think the earlier comment that CS is excluded since "its for the kids" is accurate. We all know that recipients of CS can do whatever the hell they want with CS and the courts couldn't care less ! Whether its used to help pay (the recipients) mortgage or a trip to Mexico the recipient can do what they wish.

I would love to see a court case where a grown child sues the "recipient" of CS for their share of the equity in a home since it was paid for by "CS" and thus the grown child is now demanding his/her share of it lol ! Wouldn't that be sweet to the payors of ridiculously high CS !
 
I disagree. If you apply for a loan and have minor children living with you (dependents) vs. being single and receiving SS don't you think you are viewed by the lending institution as having more disposable income?
 
The following is what most lenders follow when calculating CS and SS as income:

Alimony Child Support

When accepting child support or alimony, the applicant must meet the following criteria;

- Court ordered or an executed separation agreement (lender must obtain)

- No more than 50% should be used for qualification purposes

- 100% may be used provided income represents < 30% of gross income and borrower has demonstrated receipt - through T1General - for a minimum of 1 year.
 
In my example I make 75k a year and ended up paying my ex 1100 in CS and 750 in SS. Yes 1850 so those paying less consider yourselves lucky!! They were initially looking for 925-1250 SS ontop of the 1100 CS !?!?! She doesn't work either and has made no effort in the past 15 months to look for work but that's another issue which will be looked at sometime... still shaking my head at all this but anyway.

Thankfully I've managed to pay off the lawyers bills which have been close to 10k although what i got for that makes me wonder if it was worth it. At least i'm in a position where i don't owe anything except my mortgage which isn't a bad situation to be in but getting approved on what i'll have to pay regardless is just another brickwall.

It bugs me the most that we're put into the situation even though we try to do everything right especially for our kids... it's a messed up situation.
 
Can you possibly not disclose you CS and SS obligation to the lender? By the way, the "miracles" that brokers make happen are nothing more than lying on application forms in one way or another.
 
This may be idiotic but.....could you get a house with a granny flat and use that potential income as leverage in getting a mortgage?
 
John, please clarify what you're doing mortgage wise. Are you trying to increase the mortgage to extact some equity to pay off your ex ?

Or, are you simply trying to take her off the title and mortgage ? It's not clear what you're doing mortgage wise.
 
Initially i was planning on leaving the existing mortgage in place as it's at 2.25% for another 4 years, simply have her name removed and take out a 2nd loan for an additional 25k to pay her out. This would allow me to retain a low interest rate and remove her name as needed.

To have her name removed the bank still wanted me to qualify me. One option is to do nothing to the mortgage and leave her name on it but i'm not sure if that's an ideal situation. I could find the additional funds elsewhere at a higher rate to pay her out without touching the mortgage but i was hoping not to have to do that.

The seperation agreement has a release of all interest in the property I would just prefer to have her name removed from the title and mortgage. Now if i did leave the mortgage alone with her name on it can the title be altered without touching the mortgage.. that i don't know.
 
Double check with a REAL ESTATE lawyer if you can take her off title but leave her on mtg BUT I "think" (not 100%) that the bank has to approve it before taking her off title.

If it was me, I would make things "clean" and get her off title and mortgage and get the $25K elsewhere, even if you have to pay higher interest rate. It would make me nervous having her on title and at a minimum she could make things difficult if you ever wanted to sell/remtg etc. Besides, depending up equity in the house, the bank may approach down the road and solicit a line of credit at good interest rate. $25K is not a huge amount of money and interest rates are pretty good right now. Just my 2 cents....
 
That's my issue.. i'd love to get her off the title and mortgage but to be reapproved i don't qualify as they use the CS and SS payment as if it was the same as any other debt payment.

I have a good credit rating, make decent money, have no other debt, and i have equity in the home. I've been paying for the past 15 months with no issues at all yet they won't qualify me because of the income to debt ratio. Fun eh.

One option is to leave the mortgage alone find the 25k elsewhere but i don't like having her still on title etc... although signing the seperation agreement 'should' be good enough but i don't like it.
 
Ask your lawyer about having her sign a separate document relinquising all rights to the home and giving you permission to remortgage or sell the property as of x date forward.

Basically that she is aware she is on title and mortgage until such time that you sell, refinance or the mortgage comes up for renewal. That she will not hesitate to sign off on any and all documents needed in the future as her legal claim to the property ceased on x day.

You have a great interest rate...and the penalties to change may be more than the interest you'll pay on borrowing the funds from elsewhere. Plus if you manage to refinance your mortgage the interest rate is going to be higher as well...
 
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