shift differential and qualifying for mortgage

[lalalalexi]

So here's the deal: I am trying to qualify for a mortgage and would really like to include my shift differential in my annual income, since this obviously would help me qualify for more money. My lender told me that in order to have this money included, they would have to contact HR to do an employment verification. I called HR today to ask if they would include my shift differential when my lender called to confirm my pay rate and hours, and was told that they do not include shift differential when confirming wages with lenders because it's not "a sure thing". I was kind of POed by this because I have been hired at this hospital to work a certain shift, and a certain number of hours. I ALWAYS get shift diff, because I am working what I was contracted for. Anyone out there ever have this problem? I think HR is wrong to not include shift diff when giving lenders income amounts...

[rn/writer, RN]

Ask if HR will provide a separate letter stating what the shift differentials are for your job in your facility. Perhaps then a letter from payroll verifying what you have actually earned thus far via differential along with a copy of your contract/agreement/job offer would be helpful.

W-2 forms don't break out various components of your pay, but your pay stubs do. If you can show the lender that you consistently earn so much for the differential and that you were hired to work a specific shift (so they know that amount should continue), you might be able to convince them.

One word of caution--perhaps you shouldn't look at mortgaging yourself to the hilt. This has left a lot of people "upside down" in their loans (owing more than the house is worth) and stressed to the max. It can be a good idea to leave yourself a cushion so you don't end up a slave to your payments. Just a thought.

I wish you the best.

[SonorityGenius]

When I got qualified for mtg they used by annual taxes for verification; obviously if you consistently get shift diff your annual wages will be higher than just doing the math with your base salary

[DayDreamin ER CRNP]

I was a REALTOR up until a year or so ago when I went back to nursing school.

I am pretty sure you can use either your estimated yearly salary or include your hourly rate of pay when applying for your loan.

Do you have a mortgage lender you can call and ask w/o them doing a pre-approval? I sold a house to a nurse that worked weekend days and got the w/e Baylor pay and they DID consider her Baylor rate of pay and not her base rate of pay.

I've also sold several homes to people that ONLY earn a commission so obviously they don't consider that an unsure thing. I do know they look at the buyer's pay history going back a few years, not just one. Make sense?

Interest rates are really great right now so I hope you can take advantage of it!

Good luck!

meredith

[klone, MSN, RN]

As someone else has said, income verification is often done through pay stubs and previous years' W-2s, which would have your TOTAL income, not just base pay. Absolutely you should include shift differential (as well as bonuses, mileage reimbursement, etc) in your total income.

[linearthinker, DNP, RN]

It sounds like you are trying to borrow more than you can comfortably afford.

[happy2learn]

I don't understand why your lender won't allow you to include your shift differential. Have you tried other lenders?

I worked for a mortgage broker and income verification can be done other ways.

You can't really estimate your income. That's part of the reason for all the mortgage issues and the market crashing. People were "estimating (stating)" their income, and it wasn't accurate. Lenders didn't verify the stated income, and those people got in a mortgage that was too much for them. Lenders are much more cautious now. They need proof of your income.

[happy2learn]

It sounds like you are trying to borrow more than you can comfortably afford.

I highly doubt a shift differential is going to make THAT much of a difference in the mortgage payment.

If someone has a $3 shift differential and currently qualifies for a $200k mortgage, which is roughly a $1200 payment w/o taxes, adding that $3 is only going to up the payment like $150, bringing the qualifying mortgage amount to roughly $225k.

Also, debt to income ratio can play a factor in the interest rate.

But yes, OP, if your reasoning is so you can max out how much you can borrow, not a good idea. You always need to keep the "what if" in the back of your mind.

I have a friend that purchased a home 2 years ago. They were living very comfortably(maxed out the mortgage amount, but no other bills), but now, due to sad circumstances, they have run through about $40k in life savings and are barely able to make the mortgage. And they both have full time jobs.

[noahsmama]

I highly doubt a shift differential is going to make THAT much of a difference in the mortgage payment.

If someone has a $3 shift differential and currently qualifies for a $200k mortgage, which is roughly a $1200 payment w/o taxes, adding that $3 is only going to up the payment like $150, bringing the qualifying mortgage amount to roughly $225k.

In some markets, being able to pay an extra 10% can make a BIG difference in which homes you can bid on, especially if what you can afford is on the bottom end of the range for "starter" homes. Answering as someone who's been there.......

[klone, MSN, RN]

It sounds like you are trying to borrow more than you can comfortably afford.

I think that's a pretty specious assumption to make without knowing all of her financial information.

[linearthinker, DNP, RN]

I highly doubt a shift differential is going to make THAT much of a difference in the mortgage payment.

If someone has a $3 shift differential and currently qualifies for a $200k mortgage, which is roughly a $1200 payment w/o taxes, adding that $3 is only going to up the payment like $150, bringing the qualifying mortgage amount to roughly $225k.

Also, debt to income ratio can play a factor in the interest rate.

But yes, OP, if your reasoning is so you can max out how much you can borrow, not a good idea. You always need to keep the "what if" in the back of your mind.

I have a friend that purchased a home 2 years ago. They were living very comfortably(maxed out the mortgage amount, but no other bills), but now, due to sad circumstances, they have run through about $40k in life savings and are barely able to make the mortgage. And they both have full time jobs.

I agree, that's my point exactly. If the $3 makes the difference between buying house a or house b, better acknowledge that house a is out of comfort range and go for something more modest. I just hate to see people get in over their heads. We put 25% down on our house and got up to 50%, now it is zero, or less than zero after real estate expenses, etc and I couldn't sell or move if I wanted to. My mortgage payment is still only 12% of our income however. IDK, perhaps I'm just bitter.

[ukstudent]

I don't know where the OP works, but around here hospitals have been cutting/reducing or just plan stopping some of the differentials.

The OP might work a night shift with say a $5/hr diff this year, next year the hospital could change it to a $2/hr diff. This might be why HR says it is not guaranteed.