Collins & Demac Real Estate



Posted by Collins & Demac Real Estate on 9/11/2014

Getting a mortgage these days can be tough and it is even tougher for small-business owners. Potential self-employed borrowers usually have variability in their income streams. Today, banks are requiring more financial documentation from all buyers, and self-employed borrowers tend to face more scrutiny. Small-business owners may have a smaller income because they are typically knowledgeable about tax deductions and credits. This often reduces the amount of taxable income they have. Reducing the amount of taxable income on your tax returns means to the lender there is less income to qualify for a loan. There are ways self-employed borrowers can increase their chances of getting a home loan, however. Here are a few tips: What is the lenders history? Find out if the lender has a history of working with self-employed borrowers. Self-employed borrowers should focus more on finding a lender that will understand their situation rather than shop the loan rate. There are individual loan officers who will be able to think out of the box or come up with solutions. The lender you choose is key. Consider portfolio lenders. Portfolio lenders have more flexibility in originating loans because they don't have to sell the loan to Freddie Mac or Fannie Mae. Portfolio lenders hold their own loans. That makes a big difference in their ability to loan. Another option may to consider credit unions. Many credit unions also keep a good portion of loans on their books. Boost your income. Show you make as much money as possible on your tax return. You might need to amend your tax returns. Some lenders will look at a loan application again if they have sent in amended returns to the government. Sometimes by rethinking deductions and credits on income taxes, a borrower can increase his qualifying income. Of course, with this strategy, the borrower would also face a new tax bill.





Posted by Collins & Demac Real Estate on 7/4/2013

When it comes to mortgages there is a lot to know and a lot of choices. One loan that was popular before the housing crisis was the interest-only loan. An interest-only loan is an adjustable-rate loan with an initial fixed period when only interest is due. They are typically available in 5-, 7- or 10-year terms. Economists blame interest-only loans for the foreclosure crisis citing they were issued too freely. Today, interest-only loans are more difficult to obtain. Borrowers were using interest-only loans to qualify for a more expensive home and when the interest-only term ended the payment went up leaving many homeowners unable to afford the mortgage payment. Interest-only loans are now being used by wealthy borrowers as a financial tool to help them manage irregular cash flow, reap a tax benefit, or free up cash for investment elsewhere. Lenders that offer interest-only loans have strict qualifying standards. They generally require 30 percent equity in a property, and a minimum FICO score of 720. Lenders also look at the ability to pay back the loan is based on the fully amortized payment, not the interest-only payment.    







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