The New York Times ran an important story last week concerning pregnancy and mortgage approvals. Titled “Need a Mortgage? Don’t Get Pregnant“, the article discussed the difficulties that expecting and recently-expanded families are having with their mortgage financing.
NBC’s The Today Show picked up the story as well, as shown in the 3-minute clip above.
The crux of the issue is that maternity/paternity leave often leads to a change in household income and mortgage lenders will no longer assume one or both parents will go back to work full-time. The loss of income can raise a household’s debt-to-income ratio to unlendable levels.
This smacks of irresponsible piece of journalism, because it does not present all the facts. Your loan officer cannot ask you about a pregnancy; such questions would be in violation of Equal Credit Opportunity Act. But he can ask whether you expect your future employment and income situation to change. This would be a perfect time to broach the topic. And you should. If you’re found to have withheld employment and income information from your lender at a later date, it could result in an immediate loan denial plus a loss of earnest monies paid.
Across both pieces, though, the prevailing message is this: Families concurrently planning to (1) have a baby and (2) buy a home should be up-front and forthcoming with their loan officers. Financing is often still available for families expecting an addition — there’s just some extra paperwork though which to work.
Be prepared for that paperwork and you’re more likely to get your loan.