Mortgage Mythbusters

Welcome to Mortgage Mythbusters!

At WesBanco we know that homeownership has the power to impact a family for generations. We recognize that the path to homeownership looks different for everyone and can be quite challenging. Here are some insights to common myths and hurdles that homebuyers face. From down payment obstacles to credit worthiness, WesBanco is debunking them all.

Contents

Myth 1: My income is not traditional – I will never qualify for a mortgage.

Myth 2: My credit score is bad – I will never own a home.

Myth 3: You need 20% down in order to purchase a home.

Myth 4: Sellers will never accept offers from first-time homebuyers.

Myth 5: Getting a Mortgage loan is hard!

 

Myth 1: My income is not traditional – I will never qualify for a mortgage.

Kathleen Nunlist, NMLS# 353732 | VP, Residential Mortgage Originations

One topic that many borrowers misunderstand is how lenders look at different types of income. When you are trying to get qualified for a mortgage loan, your lender is going to determine how consistent your income is and there are different regulations and guidelines that lenders must follow depending on the type of mortgage loan you are getting.

The first type of income is a straight salary and hourly where you work the same number of hours every week. These are the easiest incomes to calculate because your gross pay is the same on every pay stub. We just use your gross annual pay divided by 12 months.

Where clients I talk to get most confused is on sources of income that may vary such as bonus pay, overtime, commissions, shift differentials, self-employed and rental income. To look for consistency, we’re generally going to look at a 2 year history to determine an average. If you recently changed jobs or haven’t received this type of income for 2 years, we may not be able to consider that income. Or if you make more now than you did last year, the average we use may be lower than you would expect.

I’ve had clients tell me they wouldn’t be qualified because they are on a fixed income, such as social security or disability income or pension. We most certainly can! We may even add a little more to our calculation if your income in non-taxable!

And finally, income such as child support or spousal support may also be used if you choose to. We want to see that this income will continue for at least 3 years and that you have received it consistently for at least 1 year.

 

Myth 2: My credit is bad – I will never own a home.

Lew Voisey, NMLS# 562824 | SVP, Regional Sales Manager

Never say never. You have control to turn your credit in the right direction and be in a position to buy a home in as few as 3-6 months. In consultation with CredEvolv, you can be mortgage ready sooner than you think. It begins with having the dream of ownership, followed by the commitment to take positive steps to improve your credit. Let your heart dream, your head do the work and your hand to open the door of your new home.

 

Myth 3: I need to put 20% down when purchasing a home.

Lorraine Cipra, NMLS# 772571 | Mortgage Loan Officer

Potential homebuyers generally have their own notions of home ownership and the requirements, which may lead to some misconceptions. One of these misconceptions is that a 20% down payment is necessary to become a homeowner. The good news is that this is indeed a myth. Unfortunately, this has scared many, many renters away! If the median sales price in the US were $230,100, then that would mean $46,020 for down payment, which may not be manageable for many.

Through WesBanco, we have many mortgage solutions and options that do not require 20%. In fact, we have programs that allow for 0% down – Community Heroes, Wealth Builder, Doctor Mortgage Program, VA and USDA¹. Other first-time homebuyer programs allow for as little as 3% down and the FHA minimum requirement is 3.5% down.

As a potential homebuyer, it is important to be educated and know your options!

 

Myth 4: Sellers will never go with a first-time homebuyer.

Monica Notestine, NMLS# 356209 | Senior Mortgage Loan Officer

A myth in the housing market that I’ve seen in my career is that Sellers will never go with offers from first-time buyers. That myth is unfounded!

First of all, Sellers and Realtors cannot be discriminatory in any aspect regarding the sale of real estate. What Sellers want to see, whether it’s from a first-time buyer or a buyer who has owned multiple homes in their lives, is a prequalification letter from a reputable Lender like WesBanco Bank. With prequalifications, a Loan Officer like me, pulls and reviews credit, enters all the information needed, and calculates the maximum a Borrower or Borrowers can afford based on debt-to-income ratios. Being prequalified has multiple advantages such as it lets the Borrower know what price range they should be looking for in a new home, and it provides the Borrower a prequalification letter to give to their Realtor to submit with a purchase offer – and in this market where the housing inventory is low, most Sellers will typically accept an offer that they know the Buyer has been prequalified, verses one that hasn’t been.

Secondly, there are multiple loan options available for first-time buyers, some with very little down payment requirements. Sellers don’t know what type of loan a Buyer will be using because all they care about is that the loan will close.

 

Myth 5: Getting a Mortgage is too hard!

Patti McClister, NMLS# 574735 | Mortgage Loan Officer

Whether you are a first time homebuyer or you are back in the market for a home for the first time in several years, you have likely heard horror stories about the mortgage process. Most of what you heard is probably an over exaggeration or a myth. The mortgage process is not as scary as some may think if you are prepared.

Lenders want to make loans. We are tasked with making sure that borrowers have the ability to repay them. This requires review of your income, assets and credit history, so we will ask you for your most recent 30 days paystubs, your last two years W2’s (tax returns for self-employed) and your most recent two statements from your asset accounts.

Now that you have those items, let us look at them and see what a Loan Originator will be looking for. Bank statements first: are there large deposits? Where did that money come from? Did you sell something; get an inheritance; insurance settlement; or a new loan? Be prepared to explain and document the deposit.

On your paystubs, we will be looking for the pay rate, pay periods (weekly, bi-weekly, bi-monthly) and gross income. We use the gross income amount to see if you qualify. Then we consider deductions: are there child support payments, garnishments, and/or loans? Be prepared to explain and document them. Credit history tells us about your willingness and ability to pay your current expenses. We look for late payments, collections, past or current bankruptcies as well as evaluate the amount of your monthly payments.

If you stay positive and remember that what you are being asked for is to insure that we are not putting you in a position to fail as a homeowner, you will have a smooth and easy process. You may even find that you have a trusted advisor that you can reach out to anytime for advice on reaching your financial goals.

 

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1. Private Mortgage Insurance may be required.
All loans are subject to credit approval.