I constantly get questions about whether or not someone who is self-employed needs a minimum of two years of tax returns, or if they can get away with one year of them, when qualifying for a mortgage. I thought I would answer this question and put it to rest. Please realize guidelines can change in the future. As of the date of this blog, the hyperlinks below are guidelines related to the history that self-employed people need, and the number of years of tax returns they need to document their income. Read the rest of this entry »
Cash reserves are monies that you need to show a mortgage lender that you have leftover after settlement for emergency and for cash cushion, to convince the lender you have some reserves after settlement in case of any issues when transitioning into a new mortgage loan. Obviously underwriting guidelines can change based on loan type and Read the rest of this entry »
Often times when a buyer and seller are negotiating over the sale of a home, the buyer indicates they would like to have certain personal property from the home. There are times when the seller is OK with that, either due to not wanting those items, or wanting the buyer to have them to help facilitate the sale.
However, there is a problem with this. The problem with including personal items like furniture, rugs, chandeliers, a pool table, and these sorts of personal items is that once they are written into the contract they inherently have value. Yet, the document being used to buy and sell real estate is a real estate contract, also used to contractually bind parties in a real estate transaction; it is not supposed to be a pool table contract! Read the rest of this entry »
There is a new underwriting rule change that is going to be very painful for mortgage borrowers. It has to do with open 30 day charge accounts. The rule says for open 30 day charge accounts that do not reflect a monthly payment on the credit report, or 30-day accounts that reflect a monthly payment that is identical to the account balance, lenders must verify borrower funds to pay off the account balance. The documented funds must be in addition to any funds required for closing costs and cash reserves. This is very important. It used to be Read the rest of this entry »
I had a file come out of the underwriting department recently, and learned something new…apparently windows need to be operable and open. Sounds silly huh? But operable windows are important due to safety reasons and ingress/egress to get out of the house in an emergency. You want to hear more? OK, read on. Read the rest of this entry »
When you have any sort of income that varies, such as overtime, bonuses, commission, self-employment, etc; you need a two year history of that income. This way, when you have a two year history, the underwriter can determine an average income. For example: Read the rest of this entry »