With our current booming economy, more and borrowers are starting businesses or taking on freelance work. That’s a great thing for the economy, but not so great when applying for a loan. Here are some pointers when applying for a loan as a self-employed borrower:
1. If you are not 100% owner of the company, but are trying to use company income to qualify, the lender will not allow 100% of the income to be used for qualification. Usually, when you open a Corp or an LLC with two or more people, you must specify the percentage amount of ownership. This is the amount you can use to qualify. If you do receive a salary from the company, then that salary can be used as your personal income in addition to your percentage of the profit from the company.
2. If you have paid yourself W2 and are less than 25% owner of the company, then you can use the most recent W2 income to qualify instead of averaging the two years. If you have paid yourself a 1099, then a two-year average is needed to qualify.
3. You can use business funds for your down payment. It is better if you are 100% owner, but if not, the other partners/shareholders must write a letter of explanation informing the lender that the withdrawal of funds will not harm the company in any way.
4. Most lenders require the business to be open for a minimum of two years. I have had a situation where the borrower has closed his business and started another one because he/she failed to pay the annual corporation fee. By doing that, they could not use the previous company to fill in the two-year history. If you need to open up a new company, one way is to have the new company take over the old company as an asset, and then you can document continuation and support the two-year work history.
5. I have had situations where the income from the previous year was more than the recent year. Most lenders tend to shy away from these borrowers. To circumvent this, you may be able to write a letter of explanation based on a hardship which was not under your control. If you can provide a current P&L Statement showing the income is equal or more than the previous years, then the lender may consider it.
I Hope these tips help you in your goal of home ownership. To read our latest blog post, click here If you have any questions, please contact us (407) 930-4490. We are happy to help.
Ok, so, you are ready to sell your home. You know you need to make some improvements, but budget is tight, and you want to make the property more appealing.
I know the feeling…
With my experience as an appraiser and as a real estate broker, I have come up with five items that will help in raising the value of your home while also generating appeal for your new buyers.
The kitchen is the most important area for the buyer . If the kitchen has not been updated in about 15 years, chances are it will need some refreshing.
The first item I would change is the kitchen hardware. This means door knobs and door hinges. By changing these items, you would make the kitchen look updated without breaking a sweat. If the kitchen doors are not leveled or closing correctly, this also doubles as a great fix.
Second, insert a Sticker tiled back splash. Installing a back splash not only refreshes the kitchen, but also makes it more appealing to your buyers. You can find the back splash in home depot for less than $10 a sheet. If you are handy you can install them yourself. If not, Home Depot provides classes on this. You can also easily find a suitable tutorial on YouTube.com.
Bathrooms are the 2nd most important area for your buyers. While There are many things you can do to your bathroom, the most cost effective changes are the ones dealing with hardware. By updating the hardware…meaning the knobs, faucet, shower head, toilet seat, lighting, and mirror, you can change the whole feel of the bathroom.
Home Depots offer many options for your hardware. You can First go online to the home depot website and see which options appeal to you. Then you can go to the store to see what they carry in person. The lighting should be very fun to choose. There are literally hundreds of options.
If you currently have a border-less mirror, it's time to make the upgrade. Depending on your preference, you can choose one long picture framed mirror, or two side by side picture framed mirrors. Make sure you choose the frame and color to go with your current look. Amazon.com also has great choices and prices.
3. AC filter, vents, and Clean up.
If you have a home with dirty vents, I recommend hiring a company to clean out the dust in the vents. Once those vents are clean, replace the Air Filter and make sure you do the monthly maintenance. If you are not aware what the monthly maintenance is, I'll gladly tell you…change the filter and insert 1 cup of vinegar with 1 gallon of water through the insert near the ac handler. Done.
Once you complete that, change the vents on the ceilings. This makes a huge difference. I'm not saying change all of them, but you would do well to change the ones near the entrance, kitchen, and living areas.
4. Front Yard
If the kitchen is the most important room inside the home, the front yard is the most important area outside the home. This is because the yard is the first place your buyers will see. You may be able to get away with having a poorly designed front yard while having a great interior, but first impressions count!!
Have you ever heard the saying, “You can’t judge a book by its cover”? Well, this does not necessarily apply to real estate. You need to grab the buyer with a “WOW” factor in order for them to stop the car and desire to see inside of your home. One easy way to do this is By simply adding red mulch or white rocks to the front yard. Why red or white? Well, if you drive by a home that has brown or black mulch/rocks, does it stand out?......Didn’t think so. What you want to do is create an attention-grabbing contrast between your home and the front yard. The colors red and white are perfect for achieving this result.
Lastly, you can insert various plants and flowers to give your yard an "at home" feeling. Color goes a long way here as well!
Paint, In my opinion, is one of the "WOW" factors that buyers notice when it's new. This is especially true inside of the home. Most paint usually fades after 5 years +/-. Once you slap on a new coat, not only will you get rid of all of the markings from your kids ( bumps, scratches, etc.,), but also make your walls appear as if they where built and finished the day before. Try and let me know.
I hope these tips are helpful to you. They have worked for me many times. To read the latest blog post, click here. If you have any questions please feel free to contact us (407) 930-4490. We will be happy to help.