Part-time earnings: The newest underwriting crimp
We've been hearing a lot lately about how tight lending standards are -- the latest crimp in guidelines is an interesting one. Part time workers are having a hard time using their income to qualify for a mortgage. The LA Times digs into the issue:
Isn't income always income? If you make $42,000 from your regular full-time job and $18,000 more by working part time at a second job, isn't your gross income $60,000?
The IRS would tell you it is. But mortgage lenders may disregard the $18,000 unless you can document that you've been receiving the extra money steadily for two years and the pay is likely to continue.
Given that the nation's tepid economic recovery is being driven in no small part by a rise in part-time workers, this is becoming a problem for more than a few would-be loan underwriters. According to the most recent economic data from the Bureau of Labor Statistics, more than 27 million Americans were employed part-time during August.