The world sure is an interesting place right now. Whether you are on the right or the left, the good news is interest rates are at a 50-year low. No matter what your goals are, how many homes you have…now is the time to strike while the iron is hot. Make sure to take advantage and pick up those additional properties. Go refinance your current long term holds and increase your cash flow. Pull out the cash to purchase additional properties. Do not let the time pass when money is this affordable is what I am trying to say.
With that being said, we have also had many changes in lending with everything going on. Self employed borrowers have been hit most. Here are the changes regarding being self-employed.
Self Employed Borrower Changes Direct from Fannie Mae
Self-employment income is variable in nature and generally subject to changing market and economic conditions. Whether a business is impacted by an adverse event, such as COVID-19, and the extent to which business earnings are impacted can depend on the nature of the business or the demand for products or services offered by the business. Income from a business that has been negatively impacted by changing conditions is not necessarily ineligible for use in qualifying the borrower. However, the lender is required to determine if the borrower’s income is stable and has a reasonable expectation of continuance. 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 that the self-employment income meets our requirements:
- 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 lender 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 lender 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 below.
Let me know if you have any questions or would like any estimates! Stay healthy!
|ANDREW AUGUSTYNIAK Branch Manager/Loan Officer Peoples Mortgage|