Housing Comp’s vs. Lender Comp’s
To Realtors, a Comp (“Comparable Sold Property”) is a nearby, recently sold home similar in size, style, and condition to the “subject home” (the home being valued).
What’s a “Comp” to a lender?
The borrower’s annual income for any given year.
Excluding a Harmful Comp
Just like the key to a home appraising can be excluding a “bad” Comp (an isolated foreclosure nearby; a home that was dumped cheap by an estate seller, etc.), the key to qualifying a borrower for a mortgage can be excluding a year with sub par earnings, especially if there’s a ready explanation.
According to Edina Mortgage’s Steve Mohabir, the odds of the lender going along further improve when the applicant’s long-term earnings trend is up, and the bad year is truly an exception.