Buying a Home When You’re Self-Employed

30th Jul 2020 Uncategorized

While being an independent contractor, freelancer or entrepreneur can certainly be a freeing career choice, it also comes with some challenges. For instance, it can make getting a mortgage loan harder. Without W-2s, a consistent salary and an employer to back you up, it’s harder to prove your income as a self-employed professional — let alone show you’re not a risk as a borrower. Are you planning to buy a home or refinance while self-employed? These five tips could improve your chances of approval: Get your finances in order. You’ll need to prove your income through bank statements, invoices, profit-and-loss statements and balance sheets. Be sure they’re ready and organized before applying for your loan. Reduce your tax write-offs. Maxing out your deductions can seem smart, but when a home loan is on the line, it can actually hurt you. The more write-offs you take, the lower your income looks, meaning you seem like a riskier bet. Boost your credit score. Higher credit scores are always more appealing when it comes to getting a loan, so take time to improve yours. Pay down debts, settle any overdue accounts and ensure your credit report is accurate. Bring in a co-borrower. When you add a second borrower to the loan, their income is factored in, too. Make sure you choose a co-borrower with good credit, a low debt-to-income ratio and steady pay. Keep your work consistent. Don’t switch industries just before applying for your loan. It’s best if you’re in the same line of work for at least two years. Getting a mortgage while self-employed certainly has its challenges, but it’s not impossible by any means. Reach out today for more home financing guidance.

Mortgage rates fall below 3%

02nd Jul 2020 Uncategorized

More conversation from Federal Reserve Chairman Jerome Powell has been seen another historic drop in mortgage rates, which have come to an all-time low under 3%. In two days of testimony to Congress this week the leader of America’s central bank said the economy faces an “extraordinarily uncertain” recovery from the coronavirus pandemic. Infections have been rising rapidly, and many states have stopped their reopening plans. But while Powell raises the concern, the Fed’s policies that have pushed mortgage rates deep into the bargain bin appear to be working some magic on the economy. The housing market is rebounding and could lead the U.S. out of its COVID-19 recession, experts say. How low have mortgage rates gone? Mortgage rates dipped on Tuesday to an average 2.94% for a 30-year fixed-rate mortgage, and that ties an all-time low reached in mid-June, says Mortgage News Daily. For rates these days, it’s “all about the coronavirus,” says Matthew Graham, chief operating officer of MND. “If it looks like the economy can slowly lurch back to business, rates will feel pressure to move higher,” he writes. “If it looks like coronavirus retains the upper hand, rates could continue inching toward more all-time lows.” Today’s dirt-cheap mortgage rates have helped put a fire under the housing market.  Home sales under contract have gone up by a record 44% from April to May, following two months of declines related to the pandemic. This has been an amazing recovery for contract signings, and shows the resiliency of consumers and the pure desire for homeownership. This bounce back also shows the housing sector could lead the way for a larger economic recovery. Fed chief Powell welcomes the signs of recovery, but he says the economy is still fragile. “We have entered an important new phase and have done …

Mortgage Relief Period that are Federally Backed Just Got Extended

24th Jun 2020 Uncategorized

Some people who are worried about paying their mortgages during this pandemic will luckily get an extended opportunity from the government. The Federal Housing Finance Agency Stated last week that Fannie Mae and Freddie Mac will extend their moratorium on foreclosures and evictions until August 31. If you’re not 100% aware if your mortgage falls under this CARE ACT, the CFPB has a guide for figuring out who owns your mortgage. The change reflects the reality of economic recovery during and after the COVID-19 pandemic. Many industries were shut down for more than 3 months and will take time at least that amount of time to recover. This left employees and employers struggling. Extending the moratorium shows that housing is one of the highest expenses people face each month. If you’re struggling to make mortgage payments, the original opportunity to put your federally backed mortgage in forbearance is still an option. You can request a 180-day forbearance period and later request a 180-day extension on the back of that. Your lender isn’t allowed to charge you any extra fees or penalties for delaying your payments or making arrangements for you to pay back that deferred balance later. You also don’t need to provide any documentation to prove your financial hardship. The extension may also provide a sense of security for renters, who may have access to their own accommodations regarding payments. By taking some pressure off landlords, renters may feel less pressure from them to pay on time and in full.

Why Use An LLC for Real Estate Investments | LLC

25th Apr 2016 Blog

There are a number of reasons why the limited liability company, or LLC, has become increasingly popular for the purpose of owning of real property. The benefits and protections afforded by an LLC often far outweigh the costs and burdens of forming and maintaining an LLC. While each situation is different, there are a number of clear and common reasons to use an LLC over a corporation. One of the most obvious benefits of an LLC, like a corporation, is that it limits the personal liability of its members. However, unlike a corporation, where shares of stock are attachable by judgment creditors, interests of LLC members are not attachable. In an LLC, the owners’ exposure to liability is insulated by the protection of the LLC. Another advantage of an LLC is the benefit of pass-through taxation, whereby the business income “passes through” the business to the owners’ individual tax returns. Pass-through taxation applies to a single member LLC or one formed with two or more members, which are by default taxed as a partnership. Single-member LLCs are taxed as a sole proprietorship, and thus no separate tax return is required. These tax classifications enable real estate owners to avoid double taxation on the income generated by the property and the appreciation in the value of the property upon disposition. Single member LLCs also provide the convenience of not having to file a separate tax return and the activities of the LLC can be reported on Schedule C of the individual return. Furthermore, in a 1031 Exchange, a single member LLC can dispose of real estate held under one LLC and purchase under another and still meet the statutory tax deferral requirements as the transaction is tracked by the federal identification number of sole member and not the identity of the …

What I Learned From One Mistake That Seven Years of College and Law School Did Not Teach Me

15th Apr 2016 Blog

Back in 1988, when I graduated with honors in Economics from UNC Chapel Hill, with a prestigious Morehead Scholarship, I figured I was pretty well equipped to succeed in whatever I endeavored. Thus I ventured out to invest in real estate. A brand new tower was being constructed in Flushing Queens, around the corner from where I lived at the time. I walked into beautifully decorated and arranged apartments with modern furniture and sleek paintings, with a nice lobby and a parking lot with gorgeous looking sales staff. They convinced me that if I invested in a $148,000 condo, after paying the requisite 20% down payment and closing costs and obtaining a mortgage for about $120,000, I would be able to rent the 450 square feet for $1,100 a month and would soon be on my way to real estate riches. They all sounded very earnest and sincere, so I figured they had my best interest at heart. As a result I applied for and got a mortgage from then Green Point Bank at 8% per annum, over 30 year fixed rate amortization, which at that time was a bargain, considering I did not have a full time job or a credit score I was aware of. At the closing, I discovered that my monthly interest and principal payments were $880. With tax escrow of about $150 per month and $230 of common charges per month, my monthly payment was $1,260 per month. After closing, it took me a few months to rent the place for $750 per month, which was the going rate at the time for a studio. Absorbed in the excitement of owning real estate, I had done no homework. I was starting out with a $510 per month deficit on an investment of about $30,000, not …

What To Look For In An Offering Plan

14th Apr 2016 Blog

The purchase of a unit in a cooperative or condominium has significant legal and financial consequences, so prospective buyers should always be sure to consult with a competent real estate attorney prior to signing a purchase agreement. These purchases present an additional challenge to buyers in the form of a voluminous and legalistic document known as an Offering Plan. Co-ops and condos are subject to the Martin Act, which requires that the complete terms and conditions of the property be fully outlined in an offering plan. Many offering plans can be anywhere from 300-500 pages long. The offering plan itself contains an array of information, including floor plans, unit sizes, architect’s reports, calculation of common charges or maintenance, types of appliances to be installed, how many units the sponsor plans to rent, as well as a Special Risks section that is perhaps the most important provision in a new offering. The Attorney General requires that all of these details be apparent. Most buyers will never read through the offering plan, so a good real estate attorney will carefully review all of the relevant details to arm the client with the necessary information in order to make an informed decision on whether or not to purchase. A buyer seeking to finance their purchase should pay close attention to how many units, if any, the sponsor plans to hold to rent. While bank requirements vary from one to another, many banks do not lend in buildings with low owner-occupancy rates. If the offering plan does not contain a mortgage contingency, buyers could be in for a rude awakening when they lose their down payment. Buyers should also be aware of unexpected costs, which may be specifically imposed on one party or the other in the offering plan. Unit closing costs and adjustments, …

Who is Pan Am Mortgage? I Have Never Heard of Them

12th Apr 2016 Blog

A borrower need only turn on their TV, radio or search the internet to reach traditional lenders like Wells Fargo, Bank of America, Chase, Santander, etc. These lenders can be great for individuals who are buying single family homes throughout the country. However, in the Tri-state area it often takes a little more than just sitting in a bank lobby and completing a 30 year fixed mortgage application. Mortgage Brokers in the New York City area need to know their market and their borrowers inside and out to make any purchase or refinance a smooth transaction. Pan Am Mortgage is a professional group of seasoned loan officers who are knowledgeable with all lending situations in the city, whether they are warrantable or unwarrantable Condos and Co-ops or multi and/or single family residences. Even foreign nationals are not an issue if qualified. Pan Am has lenders for all of the above properties and situations. Pan Am has been in business for 16 years. We are conveniently located in Midtown Manhattan at 116 East 30th Street. At Pan Am Mortgage we pride ourselves on being a one-stop mortgage broker. Our strength is that we have experienced Loan officers who know how to pre-qualify clients for real estate brokers. With our pre-qualification in hand, the real estate broker can be 100% confident that the transaction will close if they find the right property. In 2015, Pan Am closed over 90 million dollars’ worth of mortgages with approximately 20 different lenders. We offer a tremendous amount of options to our clients, and we thoroughly explain every detail of the loan process and all program options available. The client can then make an informed and educated decision on which option to choose. We base these programs on their credit profile. We explain the different products …

Why So Many Conditions On My Mortgage Applications? | mortgage

28th Mar 2016 Blog

The larger banks like to hire Junior Underwriters and Processors. It saves them big dollars in the short run, but does it build broker loyalty in the long term? I had been doing a lot of business with a well-known wholesale lender, 60-70 % of my pipeline would consistently be placed with this lender. They would react to all my concerns and work very hard to close my deals in a nice timely manner, with conditions, but nothing out of the ordinary. I closed a lot of business and the Account Executive would always respond to my concerns. As they grew, I noticed my account managers being transferred and I kept getting new processors. At first it was no big deal. Then I started noticing 50 + conditions a file? I am not new to the rodeo and I started researching conditions that I found were in the original submission and already in the file. This went on for a few loans and then I researched some new lenders who treated me the way I expected in the loan process. The loans were underwritten skillfully and no conditions that were totally out of whack!! So the moral of this post is that although there are many banks out there promising the world and having that brand name, they are also watching the overhead and putting people in positions that they were not quite up to speed on and delaying the loan process which does not make the client happy! I will always go with the Lender with the best inside team, Account Executive, processor & common sense underwriting. Win, Win every time! Thomas Dougherty, NMLS # 232024 Branch Manager Panam Mortgage & Financial Services, Inc., NMLS# 3360

What To Look For In Condo And Co-op Financials

27th Mar 2016 Blog

It is essential to review the financial information of a co-op corporation or condominium association prior to buying. When conducting due diligence on a building, one of the key documents is the annual financial statement. The financial statement is an indication of whether the building is in good or poor financial condition. Under New York law, every co-op corporation or condominium association must furnish its board of directors, and shareholders or unit owners, a financial report prepared by an independent, certified public accountant. Prospective purchasers should seek the advice of a diligent and experienced real estate attorneys like the firm of Kakkar & Associates to conduct due diligence on the building’s financial status. The financial statement will usually include the CPA report, balance sheet, income statement, cash flow statement and reserve fund. In reviewing each of these items, the focus should be on the assets, income and expenses of the building. If the building is a co-op it should have sufficient cash-on-hand to cover monthly expenses, and it should also have a healthy reserve fund to cover repairs or capital improvements to the building. If the reserve fund is insufficient, the likelihood of an assessment for such repairs or capital improvements is greater. Additionally, a lot of lenders will not lend in buildings where reserves are not at a minimum 10% of the gross annual revenues. In a co-op, where the underlying land is owned by the cooperative, the underlying mortgage can have a significant impact on the financial condition of the building. If the mortgage is maturing and rates are going up, then it is likely that shareholders’ maintenance will increase. A fixed rate mortgage, generally lasting five years, with twenty five year amortization, might be more favorable as compared to adjustable rate mortgage where the monthly payment may …