In a constantly changing market, it is difficult to stay updated on lending products your clients can access. That is why we are providing you with this guide to lay out a few current loan products that will fit your clients’ specific needs....
1. For Those Buying A Home With < 20% Down Payment
There are great options for those who don’t have 20% saved for a down payment; and these options are not limited to FHA loans that require heavy upfront and annual mortgage insurance premiums.
We have lenders who provide conventional loans with as little as 5% down and NO mortgage insurance. This means lower payments for your clients, and full tax deductibility (since mortgage insurance is rarely deductible due to income phase-outs). It also eliminates the need to locate FHA-approved homes and makes for easier qualifying.
2. For Self-Employed Borrowers
Long gone are the days of “Stated Income” loans. Government rules now require borrowers to prove their ability to repay loans by way of an income source. This can make things very difficult for self-employed borrowers who take heavy deductions on their tax returns.
Many self-employed people take high deductions for mileage and home offices, which crushes their qualifying limits since these deductions lower net business income.
We use common-sense investors who understand these two deductions don’t really affect a self-employed person’s “bottom line”. Therefore we can qualify self-employed borrowers based on their income prior to taking these two deductions.
Sample Scenario:
Your self-employed client has $76,000 in gross business income. After deducting $40,000 in business expenses, this client’s tax return shows a net business income of $36,000 ($3,000 per month).
Of the above $40,000 in business expenses, $12,000 are from mileage and home office deductions.
Because we have lenders who will add these two deductions back to the net business income number, the $12,000 in mileage and home office deductions won’t affect this client’s qualifications. After making this $12,000 adjustment, we would give the client credit for an income of $48,000 ($4,000 per month).
So while most lenders would qualify this client using an income of $3,000/month, we would use an income of $4,000/month. That’s 33% more qualifying income!
3. For Those With A Past Bankruptcy, Short-Sale, or Foreclosure
See last month’s article that provides a detailed breakdown of the waiting period requirements for your clients who have gone through a bankruptcy, short-sale, or foreclosure.
4. For Those Who Don’t Want 15 or 30-Year Loans
Many homeowners hesitate to refinance because they don’t want to revert back to a 30-year term, or they don’t want the heavy payment of a 15-year term loan. We are helping to solve that problem by providing flexible term options! We can provide loans with any term between 8 and 30 years!
So if you have clients who are 7 years into their 30-year loan, we can refinance that loan to a new 23-year loan. That way your clients keep the same remaining term, but with the new lower payment! Or we can keep your clients’ payment the same and provide them with the new corresponding lower term (assumes a lower interest rate can be obtained than the current loan’s rate).
HOW YOU CAN USE THIS:
We use a common-sense underwriting approach to help more borrowers qualify. We work hard to find lending sources that provide your clients with more flexible options.
Share this information with your clients!
- Inform your clients that there are still great lending options with less than 20% down payment.
- Tell your self-employed clients they can still qualify for a loan these days.
- Help those who have had a bankruptcy or distressed sale on a property in recent years.
- Educate your clients on their options for flexible loan terms.
Our goal is to keep you informed about home loans. We hope this helps increase your credibility with clients without the hassle of researching this info on your own! If you have questions, feel free to contact us any time...we’re here to help!