Can I get a mortgage post COVID being self-employed?

Lending guidelines can change.  During COVID we have seen some significant changes in tightening and availability of credit like we saw in 2008.  Housing is strong, the stock market is holding its own, interest rates are at historic lows yet the pressures of unemployment in America, the coronavirus pandemic haunting us and homeowners filing for forbearnace all weigh in on mortgage lending guidelines.

Recently as of June 2020, we have new "Temporary" guidelines for self-employed mortgage applicants.  Due to the continued impact of the COVID pandemic on economic conditions and businesses throughout the country, lenders have additional temporary requirements when assessing income derived from self employment in order to determine if the Borrower’s income is stable and there is a reasonable expectation of continuance.

The new word in lending for self-employed individuals is STABLE.  Is the income stable?

Mortgages are still available however its harder for self employed applicants to get approved and show "stable" income depending upon the nature of their business and where they are in the country.

Due to the pandemic’s continuing impact on businesses throughout the country, lenders are now required to obtain the following additional documentation to support the decision:

• an audited year to date profit and loss statement reporting business revenue, expenses, and net income up to and including the most recent month preceding the loan application date; or

• an unaudited year to date profit and loss statement signed by the borrower reporting business revenue, expenses, and net income up to and including the most recent month preceding the loan application date, and two business depository account(s) statements no older than the latest two months represented on the year to date profit and loss statement.

• For example, the business depository account statements can be no older than Apr. and May for a year to date profit and loss statement dated through May 31, 2020.

• The underwriter must review the two most recent depository account statements to support and/or not conflict with the information presented in the current year to date profit and loss statement.

Otherwise, the underwriter must obtain additional statements or other documentation to support the information from the current year to date profit and loss statement.

NOTE:  The year to date profit and loss statement must be no older than 60 days old as of the note date consistent with current Age of Documentation requirements.

Underwriters must review the profit and loss statement, and business depository accounts if required, and other relevant factors to determine the extent to which a business has been impacted by COVID 19.

Calculating income for self employed is complicated at best for lenders and now these added requirements cause some uncertainty to ensure the applicant has stable income.

We are still underwrtitng and approving these loans daily, however I thought it was important for you to know whats going on if you're self employed applying for a home loan and the lender asks you for all sorts of extra items. Now you know why...

If we can help or you have income questions, please reach out.

Aundrea Beach-Greco
Mortgage Advisor, CMPS
NMLS 333739
702-326-7866
info@aundreabeach.com
www.AundreaBeach.com

Jumbo Loans During COVID-19 - They're Back!

First of all what the heck is the definition of a jumbo home loan?  That means if you plan to borrow more than $510,400 (as of today) to purchase your new home, then you are considered in the "jumbo" loan category. With home values increasing, you may find yourself in need of greater financing to make your homeownership dream come true. That’s where a jumbo loan comes in. Jumbo loans are loans that exceed the conforming loan limit. If your required loan amount is even $1 over your area’s conforming loan limit, it falls into jumbo loan (or a non-conforming loan) status.   Just keep in mind jumbo loans are issued by private lenders and are not backed by government-sponsored entities (GSE’s) like Fannie Mae or Freddie Mac— so, requirements may vary.   Jumbo loans are considered risky and require higher credit scores. Expect to have at least a 700 FICO score and a DTI (debt to income) ratio under 43% (but preferably closer to 38%).  If you are self-employed, you will have a few extra steps. 

During COVID-19, Mortgage credit was tightening. Lenders fear they’ll take in less money, whether it’s because of defaults on existing and future loans or mortgage forbearance programs that allow borrowers to delay payments for up to a year.  Some lenders are still increasing FICO score and down payment requirements. Some of the lenders offering low-documentation loans has all but dried up. Jumbo mortgages have also grown rarer.  Lenders are concerned ... with the severity and the duration of what is going on from the COVID-19 pandemic.  Credit still isn’t as tight as it was in the wake of the 2008 financial crisis. Back then, home prices had plunged, but many families were prevented from buying, losing out to investors who gobbled up the homes. 

What happens next depends on how quickly the economy rebounds. More than 30 million Americans have filed for unemployment benefits and over 8% of households have filed for forbearance relief.  

The road to recovery is still uncertain as we start emerging from COVID-19.  Jumbo financing remains available for qualified clients, but interst rates are higher and turn-times for underwriting approval are much slower.  Rates are higher because of extra risk, excess demand, too little capacity, and too few competitors (now that many of the "BIG" mortgage banks have pulled out of the Jumbo market).

Jumbo financing is much more difficult for refinancing. Many lenders are simply refusing to do jumbo refinances now and others are limiting refinances to only exceptionally strong borrowers.

We like to remind borrowers that the jumbo market will very likely spring back to life once the COVID-19 crisis ends.  And when it does, rates will likely plummet, enabling current jumbo borrowers to refinance into lower rates.  This is something jumbo buyers should keep in mind if they are concerned about current jumbo interest rates.

CONTACT YOUR LENDER BEFORE MAKING OFFERS!
We have a surprisingly large number of buyers still in the market.  Because lending guidelines and asset positions are changing every day, we encourage all agents and borrowers to contact their lender prior to making every offer to ensure the pre-approvals still stand.Reach out if we can help!Aundrea Beach-Greco
NMLS 333739
(702) 326-7866
info@aundreabeach.com
www.AundreaBeach.com 

Financial Resources To Help People Affected By COVID-19

Right now, the U.S. is experiencing unprecedented times and people and businesses are facing financial hardship as the COVID-19 pandemic has essentially driven our economy to a standstill.  Millions of businesses have closed, 22 million of consumers filed for unemployment and even more are facing income reductions. While these are hard times for some, the good news is that help is available. From government programs to big banks, private grants, and a whole lot of companies who are trying to show their appreciation and keep their doors open, here is a long list of resources, programs, deals, and information for you.

Download

Of course, these aren’t perfect ...  you still may need to do some calling or your own research, go through an application process, or something, and programs or deals may have caps or time restrictions. But something is better than nothing, as they say, and when we are talking about financial help, any help is welcome for the average American family these days! We hope you find this useful, and feel free to share with friends, coworkers, and your community.

Remember that if you have any questions or need help we're here for you!  Aundrea Beach-Greco Mortgage Advisor, CMPS NMLS 333739 (702) 326-7866 info@aundreabeach.com www.AundreaBeach.com

Aundrea Beach-Greco

Mortgage Advisor, CMPS

NMLS 333739

(702) 326-7866

info@aundreabeach.com

www.AundreaBeach.com

Using ZOOM - Video Conferencing, Web Conferencing, Webinars

Search Results

Web results

With the recent coronavirus outbreak, many people have been asked to work remotely, schools have been taken offline to online and social distancing has forced many individuals to communicate differently - which brings in video conferencing. 

Zoom is the leader in modern enterprise video communications, with an easy, 

reliable cloud platform for video and audio conferencing, chat, and webinars.  A Zoom meeting is a virtual meeting where one person hosts and all other participants have equal footing. The host can share hosting responsibilities with other participants. Any participant can share their screen. 

Zoom users can choose to record sessions, collaborate on projects, and share or annotate on one another's screens, all with one easy-to-use platform. Zoom offers quality video, audio, and a wireless screen-sharing performance across Windows, Mac, Linux, iOS, Android, Blackberry, Zoom Rooms, and H.

To use Zoom you will need: a video camera, either built in to your device (cell phone) or a separate webcam - most modern computers, smartphones and tablets have this built in.

A Zoom account is not required to join a meeting as a participant. The basic tier is FREE.  Having your own account will allow you to host your own meetings or schedule a meeting.   There are four plans available; the most popular now likely being the free tier, in which virtual meetings can be held with up to 100 participants, 1-on-1 meetings without a time limit are possible, and meetings with multiple participants can be held for up to 40 minutes. (When your time is up, you can simply restart a meeting). The free option also allows users to conduct meetings in HD video and with audio, participants can join via their PC or a telephone line, and both desktops and apps can be shared. It is possible to join a meeting just from your browser, but in the interests of longevity and avoiding browser limitations, you should download the application.

To start using Zoom, make your choice (browser or download) and then choose to sign up. You will be prompted to type in your email or sign in through either Google or Facebook. At the next prompt, Zoom will ask for permission to send resources including product videos and how-to guides your way. Either click "confirm" or "Set Preferences;" the latter option being to receive emails once a week, once a month, or never. Make your selection. 

By now, a confirmation email should have landed in your inbox. Open the message, click "Activate Account" or paste the included confirmation link into your browser, and then at the next prompt, you will need to complete account creation with your name and a strong password. If you wish, on the next screen, you can invite your colleagues to also create an account. If not, click "Skip this step."

Remove the requirement to "ask for a meeting password".

Sign in to the Zoom web portal and navigate to Meetings. Click Personal Meeting Room. Click Edit this Meeting. Under Meeting Options, edit the password.

Now you can choose to create a test meeting if you like, as well as add Zoom as an extension. There are various plugins available including a Google Chrome extension, Mozilla Firefox extension, Microsoft Outlook plugin, and IBM Notes plugin. If you will be using Zoom for the foreseeable future for work purposes, you may want to select and install appropriate add-ons now.

Once you've launched your test meeting, you will be met with a screen containing the meeting's URL and the option to invite others. For now, head over to the web portal, zoom.us, to

make sure that the correct settings are enabled -- and that you

know how to create and launch a meeting.

The Zoom support page has all the info you'll need.  

https://support.zoom.us/hc/en-us/categories/200101697

Fix and Flip Financing is Available

HGTV has made buying homes to fix and flip super popular. 

But unless you have oodles of cash or you're on the TV show, where do you get the money to fund all of this?  There are lenders out there that provide Fix and Flip financing for investment properties. If you're looking to reno your own home, that's something totally different. 

By using money from non QM lenders and private investors, they aren't bound by rigid banking guidelines and can offer you some of the most flexible loan terms in the industry depending on the deal, your investor profile, background, and experience. 

Other lenders take a one size fits all approach to making loans, while we carefully evaluate each and every deal and offer competitive terms when the deal makes sense. From Residential Fix and Flip, Rental, Line of Credit, Refinance or construction, it's our job to get you the money to do the deal.

Terms will vary but if you have a good deal and a decent landlord background we can help your deal closed. Let's be clear, if you are new to fix and flip rates and terms are higher and these are short term deals with high rates. It is not meant to fix and hold. 

Here are a few things that you should know about our Fix and Flip Loans:

1. If your deal is good enough, the lender will cover up to 90% of the purchase price, rehab, and closing costs, points & interest.
2. The max loan amount is based on the after-repair value, not the current value or purchase price. If the numbers line up, the lender will fund it.
3. They lend up to 75% of the ARV. The lender will fund everything but earnest money as long as it fits within 75% of the ARV.

Here is an overview of some of the types of Fix and Flip or Hard Money deals that can be done:

• 75% Purchase, 100% Rehab
• Up to 75% ARV
• Nationwide Rental Loans
• Investor Portfolio Loan
• Investor Line of Credit
• Purchase or Refinance (Blanket Loans)
• Bridge Loans
• 1-4 Units Non-Owner
• Stated Income and No Doc
• No Appraisal Loans

We wish we could approve all deals, but not all deals are approved.

Call us today at 702-326-7866 to talk about your deal!

Let's talk about a Fix and Flip loan!

Aundrea Beach-Greco
NMLS 333739
702-326-7866
info@aundreabeach.com
www.AundreaBeach.com

Mortgage Payment Assistance During COVID-19

If you think you are going to have trouble making mortgage payments due to job loss or job reduction because of COVID-19, PLEASE make sure that you reach out to your loan servicer as soon as possible. 

Don't wait until it's too late and your credit scores take a hit. 

There are new policies in place... read below:

Fannie Mae and Freddie Mac are invoking the same types of measures to protect homeowners in the face of the COVID-19 pandemic as it has previously taken in other natural disasters such as hurricanes. 

They announced Thursday morning that it is suspending all foreclosure sales of properties securing its mortgages and evictions of borrowers living in homes owned by the company. That suspension is effective immediately and will extend to May 17, 2020. Freddie Mac said that period could be extended if the Federal Housing Finance Agency directs it.

It is also offering a package of relief options for borrowers having trouble making their mortgage payments because of the financial disruptions caused by the virus. 

Among some of the provisions:

Up to 12 months of forbearance.

Waiving of penalties and/or late fees.

Suspending the reporting to credit bureaus of information about delinquencies, forbearance, or trial and repayment plans.

Authorizing servicers to extend additional loss mitigation options including loan modifications.

These measures are effective immediately and apply to borrowers who are unable to make their mortgage payments due to a decline in income resulting from the impact of COVID-19, regardless of whether they have contracted the virus. Borrowers are eligible for forbearance regardless of whether their property is owner occupied, a second home or an investment property.

"We are doing all we can to help those adversely impacted by the coronavirus, including by immediately suspending foreclosure sales and evictions during this challenging time," said Donna Corley, executive vice president and head of Freddie Mac's Single-Family business. "These eviction and foreclosure stoppages are just one part of the comprehensive assistance we're providing borrowers to help protect our communities. We are also expanding relief available through our well-known forbearance programs, allowing us to reach the majority of affected borrowers as expeditiously as possible."

Borrowers who may be experiencing financial challenges due to COVID-19 are strongly encouraged to contact their mortgage servicer - the company to which they send their monthly mortgage payments. 

Fannie/Freddie said it is instructing its servicers to work with borrower to make sure they are evaluated for appropriate assistance.

877-542-9723 - Disaster relief center hotline

Read entire announcement from FHFA below: 

https://www.fhfa.gov/Homeownersbuyer/MortgageAssistance/Pages/Coronavirus-Assistance-Information.aspx?fbclid=IwAR3LVyYVmUbM47Xk-Z5LWPXGkfjQcpGZWh6EvFLpVtPLO_LAQO29MjEfeLU

Fed Cuts Rate to 0% - What does that mean??

Fed Funds Rate does NOT equal Mortgage Rates

Today (3/15/2020) the federal reserve announced another rate cut and here’s what that means to YOU...

• Fed cutting rates is a short term overnight bank to bank lending rate which DOES NOT have a direct impact on mortgages.

• This cut will lower rates on short term items like credit cards, home equity loans, auto loans and other consumer loans that are affected by the “prime” rate.

What does this mean for YOU and mortgage rates?

• Could move mortgage rates lower?  Yes, but they could also go higher based on this. If the stock market rallies tomorrow on this news, it could actually cause long term rates (mortgages) to increase.

• Mortgage rates are based on the MBS (mortgage backed securities) market, which is independent from the treasury bond as well as the stock markets but typically reacts within certain tolerances of those financial markets.

See link for FED OMC notice.

That being said, you should also know that the FED announced Quantitative Easing 4! Also know as QE4! 

This should be good for mortgage rates!

What is QE4? It is a financial stimulus package that will hopefully reverse the negative direction of the Stock, Treasury Bond, and Mortgage-Backed Securities (MBS) markets.

These are the main financial moves the FED will make in QE4:

- Fed Funds Rate now 0-0.25% (matches record low)
- $500 Billion in new Treasury Market purchases
- $200 Billion in new Mortgage-Backed Securities purchases (This should help mortgage rates)

In summary ... mortgage rates should hopefully go down. This is great for buyers! And of course, for people that already have a mortgage that they want to refinance and missed the first dip! 

So, people in a position to refinance could get another opportunity if they were not able to lock in a few weeks ago! 

However, they need to be ready to take advantage of it! 

BE INFORMED - Know that interest rates may go down quickly but could jump back up just as fast so don't lollygag.  Get ready now. 

If you, your clients, family, or friends have questions, or would like to see if a refinance might help you or make sense, please feel free to reach out to me. I am happy to help!

Stay Tuned!!

When Is Mortgage Interest Tax Deductible? (Updated for 2020)

2020 mortgage interest deduction guidelines: 

You might be able to deduct mortgage interest on your taxes if you itemize and follow a few other guidelines.

Mortgage interest is still deductible, but with a few caveats:

• Taxpayers can deduct mortgage interest on up to $750,000 in principal.
• The debt must be "qualified personal residence debt," which generally means the mortgage is backed by either a primary residence, second/vacation home, or by home equity debt that was used to substantially improve one of these residences.
• Investment property mortgages are not eligible for the mortgage interest deduction, although mortgage interest can be used to reduce taxable rental income.
• Home equity debt that was incurred for any other reason than making improvements to your home is not eligible for the deduction.

What is the mortgage interest deduction?

The mortgage interest deduction is a tax deduction that for mortgage interest paid on the first $1 million of mortgage debt. Homeowners who bought houses after Dec. 15, 2017, can deduct interest on the first $750,000 of the mortgage. Claiming the mortgage interest deduction requires itemizing on your tax return.

The mortgage interest deduction is alive and well in 2020. Here’s a look at how it works and how you can save money at tax time.

How the mortgage interest deduction works in 2020

The mortgage interest deduction allows you to reduce your taxable income by the amount of money you’ve paid in mortgage interest during the year. So if you have a mortgage, keep good records — the interest you’re paying on your home loan could help cut your tax bill.

As noted, in general you can deduct the mortgage interest you paid during the tax year on the first $1 million of your mortgage debt for your primary home or a second home. If you bought the house after Dec. 15, 2017, you can deduct the interest you paid during the year on the first $750,000 of the mortgage.

For example, if you got an $800,000 mortgage to buy a house in 2017, and you paid $25,000 in interest on that loan during 2019, you probably can deduct all $25,000 of that mortgage interest on your tax return. However, if you got an $800,000 mortgage in 2019, that deduction might be a little smaller. That’s because the 2017 Tax Cuts and Jobs Act limited the deduction to the interest on the first $750,000 of a mortgage.

There’s an exception to that Dec. 15, 2017, cutoff: If you entered into a written binding contract before that date to close before Jan. 1, 2018, and you closed on the house before April 1, 2018, the IRS considers your mortgage to be obtained prior to Dec. 16, 2017.

What qualifies as mortgage interest?

IRS Publication 936 has all the details, but here’s the list in a nutshell.

Interest on a mortgage for your main home

• The property can be a house, co-op, apartment, condo, mobile home, house trailer or a houseboat.
• The home has to be collateral for the loan.
• The home must have sleeping, cooking and toilet facilities to count.
• If you get a nontaxable housing allowance from the military or through the ministry, you can still deduct your home mortgage interest.
• A mortgage that you get in order to “buy out” your ex’s half of the house in a divorce counts.

Interest on a mortgage for your second home

• You don’t have to use the home during the year.
• The house has to be collateral for the loan.
• If you rent out the second home, you have to be there for the longer of at least 14 days or more than 10% of the number of days you rented it out.

Points you paid on your mortgage

• Points are a form of prepaid interest on your loan. You can deduct points little by little over the life of a mortgage, or you can deduct them all at once if you meet every one of nine requirements.
• In general, the nine requirements are that the mortgage has to be for a your main home, paying points is an established practice in your area, the points aren’t unusually high, the points aren’t for closing costs, your down payment is higher than the points, the points are computed as percentage of your loan, the points are on your settlement statement and you use the cash method of accounting when you do your taxes.

Late payment charges on a mortgage payment

Prepayment penalties

Interest on a home equity loan

• You have to use the money from the home equity loan to buy, build or “substantially improve” your home.
• If you use the money to buy a car, pay down credit card debt, or pay for something else not home-related, the interest isn’t deductible.

Mortgage insurance premiums

• This includes the amount paid for private mortgage insurance, FHA mortgage insurance premiums, USDA loan guarantee fees and VA funding fees.
• The insurance contract must have been issued after 2006.
• You can’t deduct the cost of mortgage insurance if your adjusted gross income is more than $109,000, or $54,500 if married filing separately, on Form 1040 or 1040-SR, line 8b.
• The amount you can deduct is reduced if your adjusted gross income is more than $100,000 ($50,000 if married filing separately).

What’s not deductible

• Homeowners insurance
• Extra principal payments you make on your mortgage
• Title insurance
• Settlement costs (most of the time)
• Deposits, down payments or earnest money that you forfeited
• Interest accrued on a reverse mortgage

Note, for more details contact your tax professsional.

Reach out if we can help in any way! 

Get a persoanlized mortgage plan

Aundrea Beach-Greco
Mortgage Advisor, CMPS
NMLS 333739
702-326-7866

I Want To Refinance ... But Should I Wait For Rates To Drop?

Mortgage Rates Increase even as Fed cuts Rates

Mortgage rates went from ridiculously low to not-so-bad in just over a week.

Everything that the media thinks should have happened to keep it at the ridiculously low levels did happen.

The Fed did an emergency rate cut on 3/3/2020 and cut the Fed Funds rate by half a percent. Treasury's fell to levels never seen before and the stock market crashed to a point where the Dow officially entered the bear market, ending the 11-year run in the bull market territory.

Given all this, mortgage rates should have fallen more. Instead, they climbed 0.25% in the last couple of days.

What happened here? Let’s investigate.

Fed Rate Cut and Mortgage Rates

The general public believe that Fed Rate Cut is somehow directly correlated to mortgage rates going down, the truth is – there is no direct correlation. There have been several instances where the mortgage rates actually went up the day fed cut rates and vice versa.

It happened this time too when the mortgage rates went up the day after the Fed announced the rate cuts.

The federal funds rate is the interest rate at which depository institutions lend reserve balances to other depository institutions overnight on an uncollateralized basis. That ladies and gentlemen has got nothing to do with mortgage rates. Short term loan, credit cards and HELOCs – yes, but not mortgage rates.

In fact, the Fed left the rates unchanged between 2008 and 2016. So if the fed fund rate indeed impacted mortgage rates, they should have remained unchanged for 8 years. During those 8 years, mortgage rates moved in the range of 3.375%-5.125%, a very wild swing.

Get a custom rate quote for refinancing or home purchase

Treasury Yields and Mortgage Rates

The 2nd factor widely cited which correlates with mortgage rates is the 10-year Treasury Yields, which usually has an inverse relationship with the stock market.

When the stock market goes down, the fund managers will take their billions and invest in something safe like 10-year US Treasurys (UST). While the 10 Y UST nosedived (at one point reaching under 0.5 – see the chart below), mortgage rates didn’t follow suit.

Stock Markets and Mortgage Rates

There is an old adage in the industry – What is bad for Stocks must be good for Mortgage Rates.

Unless you have been living under a rock, you must have seen stocks have been in a free-fall with both S&P 500 (see chart below) and Dow entering the bear market with more than 20% fall.

All of this has made no impact on mortgage rates.

So what really changes mortgage rates?

The only metric that really drives mortgage rates is the yield on Mortgage-Backed Securities (MBS). The higher the yield, means more the demand and lower the rate for the borrowers. The chart below will show you that MBS actually lost in pricing 6 out of the last 8 days.

Note – Red days are bad for mortgage rates and green days are good. And the longer those red candlesticks, the worse it is for rates.

In the last 2 days, the beating has been severe and the uptick in mortgage rates swift.

And then there’s that issue of too much supply. In the last 12 years, US mortgages have touched the annual $2 Trillion production mark only once. That would mean the industry has a capacity of doing about $200 billion per month, maybe slightly more.

With a sudden rate drop like this, there can be $1 trillion of new rate locks because a majority of borrowers can benefit from refinancing. But since some lenders do not have the capacity to handle the added business, they increased the rates to deter additional loan applications.

Classic demand and supply equation. Since the demand was overwhelming and the capacity to process those loans lacking, increasing the rates was meant to dampen the demand.

There is also a liquidity issue. A lot of lenders use what is called a warehouse line of credit, a short-term borrowing, to fund these loans. If they accept submissions that are way more than the money they can borrow from warehouse lines, then they will have loans that they won’t be able to fund. Another reason for them, to stop taking more loans.

Even then, I have heard some of the lenders are anywhere from 45-90 days (I have even heard the big banks are at 120 days) turn times on these refinances. So, even if you were able to lock that ridiculously low rate, you will not see that on your mortgage statement anytime soon.

Will the rates go down again?

First of all, the rates are still super attractive for most borrowers to refinance into. So, if you are thinking of refinancing and see a benefit from the refinance with the current rates, you should proceed and lock that rate.

If that’s not the case, then waiting may not be a bad idea. Once the lenders clear out some backlog in the next month ot two and the markets stay rattled with CoronaVirus fear, Mortgage-Backed Securities will get a boost and the rates should go back down again. So, stay patient.

As always predicting the future in an unprecedented volatile market is filled with "ifs-and-buts", so it may or may not come true.

And yes, Fed will cut the rates again. But by now, you are wise enough to know that it will not impact the mortgage rates in any way. Be smart and tell that to your friends too and if they don’t believe it, show them this blog.

Get a customized mortgage plan

Contact us if we can be of service! 

Aundrea

Charts Courtesy of – MBS Highway