Amazon Raises and How Changes to Pay Structure Impacts Qualifying for a Mortgage

Amazon recently announced that it’s increasing it’s minimum wage to $15 for all employees, including part-time, seasonal employees and temps effective November 1, 2018. Amazon states this will benefit more than 250,000 employees and over 100,000 people who will be hired for the upcoming holiday season. Even Operations and Customer Service employees who are already making $15 per hour will receive an increase to their hourly wage.

Amazon is phasing out the restricted stock unit (RSU) grant program and adding an employee stock purchase plan. From Amazon’s blog: 

“Yes, we’ve heard from our hourly fulfillment and customer service employees that they prefer the predictability and immediacy of cash to RSUs. We will be phasing out the RSU grant program for stock which would vest in 2020 and 2021 for this group of employees, replacing it with a direct stock purchase plan before the end of 2019. The net effect of this change and the new higher cash compensation is significantly more total compensation for employees, without any vesting requirements, and with more predictability.”

I would imagine that employees working at the in the Operations and Customer Service departments will have higher odds of being able to participate in the employee stock purchase plan instead of having to wait until they are vesting in the RSU stocks.

Amazon has fulfillment centers throughout Washington state. One is located close to our corporate headquarters in Kent, Washington. When I look online – it looks like positions start at around $13.00 per hour. If there are minimum wage jobs (outside of Seattle) at their fulfillment centers, the minimum wage in Washington state (at the time of publishing this post) is $11.50 per hour. The City of Seattle currently has a $15.00 minimum wage.

As far as a mortgage is concerned, when someone is paid hourly, typically lenders take the hourly income x average weekly hours worked x 52 weeks and then divided by 12 months. Lenders ideally want to see a two year history with the employer with the amount of hours worked being steady or trending higher.

Overtime, bonus or seasonal income generally will require two years of documented history of receiving this type of income. This income is typically averaged over the last two years.

With RSU’s (restricted stock units), lenders can consider the vested RSU’s as income under certain conditions. The employee must have received the RSU’s for at least two years, been distributed to the employee without restrictions and have documentation that the RSU’s will likely continue for at least three

Again, I think it’s a greater benefit for employees in the centers to receive an hourly increase they can enjoy now instead of have their RSU’s vested. It’s a much more practical option just in time for the holidays!

If you’re considering buying or refinancing a home located anywhere in Washington state, I’m happy to help you with your mortgage needs.

 

Qualifying for a mortgage when you pay alimony

Recently Fannie Mae and Freddie Mac updated their guidelines to treat alimony payments the same way that FHA has.

With conforming mortgages (Fannie/Freddie) where there is more than 10 months remaining for alimony payments, Fannie Mae and Freddie Mac will allow the alimony to be deducted from gross income instead of being treated as a monthly debt. This often dramatically improves debt-to-income ratios. [Read more…]

Got Bonus? Part 2: Stocks

On Part 1 of Got Bonus, I covered how lump sum cash or increases to salary are treated when it comes to qualifying for a home mortgage loan. In this post, I’ll address how bonuses that are in the form of company stock are treated by lenders. [Read more…]

Got Bonus?

The Seattle Times announced yesterday that Boeing employees will be receiving a record $600 million in bonuses starting next week. From the Seattle Times:

“Boeing’s nearly 66,000 current employees in the state will be eligible for the bonuses. More than 6,000 more who worked at least part of last year before leaving the company will get a partial bonus, prorated according to how long they worked last year.” [Read more…]

Fannie Mae updates underwriting guidelines at the end of this month

Effective July 29, 2017, Fannie Mae will release DU Version 10.1, packed full to changes to their underwriting guidelines. These changes apply to Fannie Mae conforming mortgages (Freddie Mac has different guidelines). Here are some of updates effective at the end of this month:

50% Debt-to-Income Ratios. [Read more…]

Updates to Fannie Mae Guidelines

Last week, Fannie Mae released Selling Guide Announcement SEL-2017-04 with underwriting updates, including the special pricing for when home owners refinance their home to pay off student loans. Fannie Mae is the Federal National Mortgage Association and basically provides funding for conventional “conforming” loans. [Read more…]

Fannie Mae Changes Reserves Requirements for Multiple Financed Properties

Fannie Mae is requiring additional reserves when a borrower has more than one financed property. The amount of reserves is based on a percentage of the unpaid principal balance (UPB).  Reserves are liquid funds that you have access to.  Reserves are funds you need to have after closing your transaction. Funds for reserves cannot be your funds for down payment or closing cost.

[Read more…]

FHA revises guidelines for calculating student loans

mortgageporter_student_loansTonight HUD announced that they are backing off how they have been treating student loan debts for people who are trying to qualify for a mortgage.

From HUD’s announcement:

“…FHA believes that its approach provides the appropriate balance between expanding access to credit and ensuring that the borrower is able to maintain successful, long-term homeownership.

[Read more…]