As an additional incentive for a proposed transfer or relocation, some companies and employers may guarantee the sale of the employee’s current home. Often, the employer will simply guarantee to purchase the property, and resell it later.
If an employer has guaranteed to purchase the applicant’s current residence as part of a transfer or relocation, the existing mortgage loan on that residence is not treated as long-term liability. The applicant can obtain a new mortgage loan without having to bother with the sale of his or her current home.
As usual, however, there are always conditions:
1. The employer’s responsibility to purchase the property is clearly defined and documented.
2. The borrower’s financial responsibility for the property is clearly short-term.
3. It is readily apparent that the employer has the financial capacity to honor the guarantee.
Collections and judgments are serious liabilities that must be addressed as quickly as possible, if the applicant is pursuing mortgage finanicng. However, not all collection accounts and judgments are the same.
Judgments are probably the most serious of the negative credit entries. Bankruptcies and foreclosures are the most damaging types of judgments. Judgments remain on the applicant’s credit report for ten (10) years after the discharge date. Other judgments include personal judgments and tax liens.
Delinquencies are past due bills that are at least 30 days late. Strictly speaking, delinquencies refer to past due amounts on currently open accounts. If the delinquencies are allowed to fester, they become a collection or charge-off account. In the case of cars, they can result in repossession.
Medical and utility collections are some of the most common type of collections seen on credit reports. Medical collections usually are now counted as seriously against the applicant. Most mortage lenders will require the borrower to pay off the collection and delinquency amounts prior to or duing the closing.
Short-term financing in anticipation of a long-term loan is often called interim financing. Many construction loans are actually interim loans. Construction loans are typically short-term financing that is paid off as soon as the building is completed.
Another form of interim financing may involve obtaining a second mortgage on the applicant’s current home in order to cash out sufficient funds for the down payment on another purchase. These interim financing arrangements are normally not counted against the applicant. However, they must be paid off prior to or during the closing.
Liabilities | admin | 
March 7, 2009 11:52 am | 
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