E Mortgage Blog

Mortgages for the self employed

Getting or refinancing a mortgage when you’re self-employed can be a real challenge these days. With the virtual disappearance of stated income loans, it’s become much more difficult for anyone who doesn’t get a regular paycheck to qualify for a home loan. But it still can be done.

Stated income/stated asset loans, also known as Alt-A mortgages, used to be one of the most common ways for the self-employed to obtain a mortgage. You simply told the bank what your income was and the bank took your word for it. When housing values were rising, it really wasn’t that big of a risk for the lender.

But Alt-A mortgages got a bad reputation as “liar loans” during the housing bubble, when they were abused to exaggerate incomes for borrowers who otherwise would never qualify for a loan. When the housing market and economy went sour, stated income/asset loans accounted for some of the highest rates of defaults and foreclosures, and most banks simply stopped offering them.

Proof of income is Key

 But for the self-employed, what that really means is that you’re going to have to be more thorough documenting your income when applying for a mortgage – the same rules apply to refinancing a mortgage as well. And if you’re in business for yourself, you’re probably already accustomed to filing tax reports and documenting expenses, so documenting your income for a mortgage application won’t be that much different.

Generally, you’re going to need to show detailed financial records for the past two years, as well as tax returns. You’ll probably need to file either IRS form 4506 or 8821; the former requests that a copy of your return be sent directly to the bank, for a fee; the latter allows the bank to inspect your return, for no charge.

The bank may also want documentation on clients, investments, business financial records and perhaps a statement from your accountant, as well as a month or two of receipts to demonstrate current income. A review of your financial statements per GAAP will suffice in most cases.

One problem the self-employed sometimes have is that deductions for business expenses reduce their stated income on their tax returns. If you’re planning to buy a house next year or down the road, check with your accountant to see what can be done to avoid this effect while still getting the deductions you’re entitled to – you may want to defer some expenses to the following year, for example. 

We have an accounting firm that can quickly amend your taxes and get you Qualified!


Most Commercial loans over 500K will require a Review or Audit of Financial statements per loan covenants.

It also helps to be able to show that you have financial reserves or investments on hand as a cushion in the event of a business downturn. In addition, it may be a good idea to pay off any consumer debt or at least consolidate it into a single low-interest loan with a reduced monthly payment to improve your cash flow. Your best bet is to run a pre-qualification before attempting any changes to your report as with new software on the market we can calculate scores to maximize your beacon/fico.

As a self-employed person, you probably won’t be able to get the lowest interest rates that are available to those who draw a paycheck – banks often charge about a quarter to a half of a percentage point more for mortgage loans to the self-employed. You’ll need to come up with a substantial down payment as well – at least 20 percent, preferably more.

And, of course, you’ll need excellent credit – preferably 680-720, 740 or more. You can still get a mortgage with lower scores, but you’ll find that interest rates go up fast as credit scores go down.

If your spouse has a job that provides a regular paycheck and a W-2, it sometimes helps to have them be the primary applicant on the mortgage, with the self-employed partner as a secondary applicant. Another option, particularly for young people with a relatively new business, is to get a parent or other relative to co-sign the loan for you; of course, this means they’re liable for the loan if you’re unable to keep up with the payments, so this needs to be approached with caution.

Getting a mortgage for anyone these days is considerably tougher than it was in the past. But with good credit and proper documentation, it can be done. 

We still need to lend and make money –we’re just being more cautious about how we do it these days.

Cant get financed as a self employed borrower we can help!

Get your situation reviewed today. Call us at 561-210-3000 or 239-580-9977 thru our trulia link!

https://www.lender411.com/id/cashton/

Available only on homes you make your primary residence and offers these benefits:

• Financing to fund both your purchase and light renovation
• Low down payment and flexible mortgage terms (fixed-rate or adjustable-rate)
• Down payment (at least 3 percent) can be funded by your own savings; a gift; a grant; or a loan from a nonprofit, state or local government, or employer
• No mortgage insurance*

Here is the process - Get preapproved at our secure application page:   https://www.secureloandocs.com/apply.php?id=62025782

We will call you back to tell you you are approved!

We wil help find you a home!

Close on your new home! Its that simple!

Carl Ashton

Mortgage Banker

E Mortgage Management

Phone: 561-210-3000

Fax: 866-630-4085

premiermortgagestore@live.com

Our websites:

http://www.e-mortgagelending.com/

www.premiermortgagestore.com

1. Evaluate Capital Gains: The current long-term capital gains tax rate, with some exceptions, is either 0 percent or 15 percent depending on what ordinary income tax rate you fall into. But in 2011, these rates jump to 10 percent and 20 percent. That means if you have some investments that have done well, you may want to consider selling them in 2010 to take advantage of the lower tax rates. If you currently fall within the 0 percent long-term capital gains rate, the decision may prove to be an easy one. But even for those that fall into the 15 percent bracket, saving 5 percent over next year's higher rate is significant. Of course, the tax consequences of an investment are just one factor to consider when deciding whether to sell.

2. Make Money Now: As you've probably heard, some of the higher income tax brackets will get even higher next year. The top two rates for the 2010 federal income tax brackets are 33 percent and 35 percent, which will move to 36 percent and 39.6 percent in 2011. The effect these changes will have on lower tax brackets depends on what Congress does this year, but the lower tax brackets are set to increase as well. If you fall into a rising tax bracket, it may be in your best interest to accelerate income into 2010 if at all possible. This could be particularly helpful for small business owners and independent contractors who have some control over the timing of income.

3. Green Your Home: There are several energy tax credits that are set to expire at the end of the year. For example, you can get a tax credit up to 30 percent of the cost ($1,500 maximum) on certain qualifying home improvements, such as roofs, water heaters, and HVAC systems. Make sure to verify that the product you want to install qualifies for the tax credit. And get the work done this year before the tax credit expires.

[Visit the U.S. News Personal Finance site for more insight and money management tips.]

4. Get Organized: Every year on April 15th at about 8 pm I tell myself I'll be better organized the following year. While it's taken several years of last-minute tax return filings to finally motivate me into action, this year I'm actually organized. The key is not to wait until tax season. Keep records of your taxable investments to help you calculate gains and losses. Keep your business receipts organized and separate from personal expenses. If you've made home improvements that qualify for tax credits, keep your receipts in a separate file. Staying organized takes just a few minutes week, but it can save you a lot of headaches when it comes time to file your taxes and will reduce the risk that you'll miss a tax deduction.

5. Plan Your Tax Preparation: Many use online tax software to prepare and file their tax returns. For those folks, they have some time before the 2011 versions of the tax software are released. But if you plan to have a tax professional prepare your return, there are good reasons to hire them now. First, you can take your time to find the best tax professional for your needs, taking into consideration recommendations from friends and family. Second, they can further assist you with tax planning now in anticipation of the many changes to the tax code in 2011.

It's important to recognize that tax planning is specific to each individual's situation and can involve complex analysis. So if you think some of these tax moves may be right for you, consult with a tax specialist before making any decisions.

http://news.yahoo.com/s/usnews/20100902/ts_usnews/5taxmovestomakenow

We recomend the Ashton Group at www.ashtongroup.netfor tax preparation and planning!


Carl Ashton Mortgage Banker
 
Bright Green Home Loans
 
1605B Prosperity Farms Road
West Palm Beach, FL, FL 33403
 
Phone: 561-210-3000
Fax: 561-624-1764
Cell: 239-580-9977
 
Processing: 561-249-6995

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