Monday, 28 October 2019
Being a Self-Employed Borrower Doesn't Have to Be Scary
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There are different options for self-employed borrowers to consider as they begin the process of getting qualified for a mortgage loan.

Homebuyers requiring financing are asked to provide extensive documentation regarding their employment, income, and assets. Ever since the "Mortgage Meltdown" occurred from 2007-2009, the mortgage industry has been looking at these documents more thoroughly and critically. A loan officer today will often compare his or her job to that of a private detective.

In most cases, a homebuyer's income and assets are easily calculated and documented, however self-employed borrowers are faced with additional scrutiny that can often result in a lower "qualifying income" than these borrowers might expect.

The sub-prime mortgage era presented alternatives for self-employed buyers. There were "Stated Income," "No-Doc," "No Income-No Asset" and other variations that allowed buyers to avoid the more strict conventional underwriting guidelines that applied to self-employed borrowers. We're just now starting to see some alternatives returning to the market, but today borrowers are asked to put down more money and pay a higher rate whereas in the sub-prime era there was very little premium added for these special loan products.

Borrowers are considered self-employed if they own 25% or more interest in a business or if they are 1099 employees who file a Schedule C. Self-employed borrowers are required to have a minimum of two years consecutive self-employment in the same business and geographic area. 

Typically, two years of income tax returns are required for analysis, however automated underwriting findings may allow for review of just one year's returns. 

Business income is averaged over a two-year period using Federal Tax Returns. In the case of declining income, significant compensating factors must exist to consider the income in the qualifying ratios. A significant decline in income is not acceptable, even if the current income and debt ratios meet agency guidelines.

The type of business (sole proprietorship, partnership, or corporation) determines how the income is calculated. The qualifying income will be much closer to the Net Income than it will be to the gross earnings, in most instances. This is where self-employed buyers can find themselves with less buying power than expected.

The one "tip" I could offer self-employed borrowers is that they should be conscious of the impact aggressive business deductions and tax write-offs can have on their qualifying income when it comes time to buy. While that may result in higher income taxes, it could also result in qualifying for their dream home.

And, of course, it is always best to get pre-qualified with a reputable lender before beginning your home search.

 

..."You've got a Friend in Real Estate"

Jarod Tanksley 615.403.8265

www.BrentwoodandBeyond.com

Brentview Realty 615.373.2814

 

Image courtesy of stockimages at FreeDigitalPhotos.net

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Posted on 10/28/2019 10:38 AM by Jarod
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Thursday, 17 October 2019
A New Direction for Fall
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The signs are everywhere!  The amount of daylight is changing with darkness creeping in as we finish dinner, the leaves are falling and it is now sweater and soup  weather.  Fall is upon us and along with that comes the regular use of heat in our homes.  Did you turn off all the ceiling fans in your home when you switched over to heat side of the thermostat?  

If you are among those who turn off the ceiling fans in the winter, your home may not be as comfortable as it could be and depending on the ceiling height, you could actually be spending more on your heating bill than you need to keep your living space cozy through the winter months.

In the summer, ceiling fans should turn counterclockwise which helps move air downward creating a slight "wind chill" effect.  In the winter when you are heating your home, the heat naturally rises and cold air sinks.  If you reverse the direction of the fans to clockwise the fan blades will move the cold air upwards pushing the warm air downward back into the living space.  By running your ceiling fans on the lowest setting in the winter it can gently circulate the heated air and possibly allow you to turn down the thermostat a few degrees but not notice any difference in comfort level.

Most ceiling fans have a small switch near the light fixture above the blades to change the direction.  To change the fan direction, turn the fan off and let it stop spinning.  Move the switch and then turn the fan back on.  And just one friendly housekeeping note to add about fan reversal is to take the opportunity while the fans are off to clean the blades before reversing the direction so you don't have tiny dust bunnies flying all over your rooms!  

 

...."You've Got A Friend in Real Estate"....

 

Jarod Tanksley 615.403.8265

www.BrentwoodandBeyond.com

Brentview Realty  615.373.2814

 

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Posted on 10/17/2019 9:55 AM by Jarod Tanksley
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Wednesday, 9 October 2019
Do I Need a Permit for This?
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Home remodeling is back to being big business in the United States this year with the Joint Center for Housing Studies of Harvard University suggesting that it could easily exceed the $300 billion spent last year as the housing industry continues to improve. Many Baby Boomers are contributing to these numbers as they are choosing to stay put in homes where they have considerable equity, but Millennials and Gen Xers are also gaining confidence to make improvements as the economy recovers.

The popularity of home improvement shows has also helped with this confidence as more and more people watch countless examples of ways they can use their preferences and styles to change up the look of their homes.


If you've been considering handling the bulk of the remodeling projects around your home, one thing you need get right from the outset is whether or not you need a permit for the work you have planned. According to How Stuff Works, "Building permits are the way counties, towns and municipalities enforce their building codes. Local governments adopt those codes in order to ensure that all buildings meet minimum safety and structural standards. They update them every few years as new building methods and materials are introduced." If you are hiring a contractor to do the work for you, it should be his or her responsibility to secure these permits for you, so always be sure to ask the right questions when hiring your contractor.


There are a range of fees that go along with these permits to cover the costs of having a professional engineer study and inspect your plans to make sure your project is safe and up to code. Any time you change the use or structure of a room, you need a permit, even if the change is to completely demolish the structure. Smaller projects such as painting do not require a permit, and each state may vary on what needs a permit and what does not. It is best to seek out those answers before you get started. Here are some great guidelines to help you determine if you should seek a permit: Home Renovations Permit


Permits protect you by keeping your project in code with modern building practices. This insures that your home will be safe, and it keeps you from incurring hefty fines for not following the rules. Also, permits will help keep you covered by your insurance in case there is an accident that relates to your renovation. It's better to be safe than sorry.


Once your project is complete, an inspector will come behind you to make sure all plans were followed as outlined from the beginning. This might take some time to get fully approved, but being legal and staying within code is worth it in the end.


Planning is a huge part of the renovation process, so make sure checking on permits is included in those plans from the beginning to avoid costly delays and errors.

"You've Got a Friend in Real Estate"

 

Jarod Tanksley 615.403.8265
www.BrentwoodandBeyond.com (more blogs and featured listings)
Brentview Realty 615.373.2814

 

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Posted on 10/09/2019 8:20 AM by Jarod
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