By: Randy Mitchelson, August 2010
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Mortgage Tips For Self-Employed
Back To School Credit Ideas
It’s The Jobs, Stupid
Compared to five years ago, it is tougher for consumers to get approved for a mortgage. For self-employed borrowers, it is even tougher. There are several tax advantages to owning a business. However, depending on how business owners and their financial advisors structure the business, manage cash flows and report income and expenses, the tax advantages can be offset by a painful mortgage application process. 1)Be prepared to submit unaudited Profit and Loss Statements (P & L) and a letter from a CPA stating that the company is currently in business (an audited P & L may be required at the underwriter’s discretion). 2)If the loan is underwritten after the end of the first quarter (fiscal or calendar), the most recent quarterly statement may be requested.
3)Keep in mind that it is not only banks that have documentation requirements. For borrowers that need mortgage insurance due to qualifying for a low down payment, mortgage insurance providers will have their own set of documentation requests. For example, if the borrowers prepare their own taxes, and do not use an accountant or CPA, some mortgage insurance providers will require a documented, independent third party verification that the business is currently operating.
4)Lenders still use verbal verification of employment whereby they phone your business to verify it exists.
Some colleges have a mandatory requirement for students to pass a swim test in order to earn their degree. Swimming is a critical life skill that you never know when you might need to use. College is the first time many young adults must independently make decisions about how they earn, spend and protect their money. However, it is rare to find schools with mandatory personal finance education. Some schools have ground breaking efforts in place to educate students about personal finance. Parents need to be the primary educator. Children that learn about money from a young age will be better off when they leave the nest. Parents should leverage tools that kids are using already. Sending money tips via text message is an example. Having kids listen to podcasts about money on MP3 players is another way for them to learn while jogging or sitting in a car or airplane. Economy & Financial Insights: It’s The Jobs, Stupid
The economy is usually a good news, bad news story. In order for things to remain in balance, for every piece of positive news, one can find an offsetting downside. This month we balance good news with bad news but until our economy can create jobs we will remain stuck in a narrow range of lackluster performance. The Good…
1)Personal savings continues to climb as consumers work on reducing their debt and building their rainy day funds.
2)Interest rates remain low and show signs of dropping further. This allows more homeowners to refinance mortgages and more property purchasers to qualify for financing. Also, consumers carrying variable rate credit card and home equity debt pay less interest and more principal.
1)Consumer spending is down which makes it difficult for businesses to produce and expand. Retailers are cutting into their margins to move product, resulting in lower profits.
2)We are entering a lame duck period for elected officials as they stop doing their jobs and focus on running their campaigns to retain their jobs.
Jobs reports are getting worse and prior reports are being revised downward. When you hear or read about national and local unemployment figures, add another 20% in your head to get a realistic picture. The formula used to calculate unemployment is loaded with quirks that make the numbers look better than reality in tough times, and not as good as they are in boom times. Question of the Month: Can You Help Me Obtain A Loan To Pay For My College Courses?
This month’s question comes from a subscriber to our Daily Dollar Newsletter. If tapping into home equity to help pay for college is not an option, then try these steps. The first thing you should do is visit with the financial aid office at your university. Another resource available to students is the government. For example, direct loan information is available at direct.ed.gov and additional government student financial aid info is here. These are your best, free resources for the information that you need. Giving Back: Supporting Our Communities – IRS Alert About Misuse Of Charities
Making donations is one way to be a good citizen. The IRS continues to investigate various schemes involving the donation of non-cash assets including situations where several organizations claim the full value for both the receipt and distribution of the same non-cash contribution. Often these donations are highly overvalued or the organization receiving the donation promises that the donor can repurchase the items later at a price set by the donor. According to the IRS, if you donate clothes or other property, one appropriate way to assign a value is to use “thrift store value”. For example, if you paid $50 for a sweater in 2007 and donate it to Goodwill in 2010, check what similar sweaters are selling for in the Goodwill Thrift Store (maybe $10) to give an approximate idea of what value you can claim as a charitable donation on your taxes. Do not get caught trying to claim the full $50 original price you paid in 2007. Need volunteers? Do you have a fundraising event upcoming? Do you have a personal web site where you are raising donations for your cause? Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue. Back from the summer trips and settling in for a productive late Summer and early Fall. Want to welcome our new cousin, John Matthew Williamson into this world and send long distance congratulations to cousin Emily and husband Read who is graciously helping improve the Mitchelson gene pool, based on the cuteness of their kids. Randy _________________________________________________________________________________________________________________________________________
Mortgage by Randy newsletter, Copyright 2010 Randy Mitchelson. All Rights Reserved. Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson. Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738. _________________________________________________________________________________________________________________________________________
You have permission to publish this article electronically or in print as long as the following is included: Randy Mitchelson, of Estero, Florida, is a business professional, entrepreneur and author with over 15 years experience in financial services. Mitchelson has served in leadership roles for Global & Fortune 500 firms like Bank of America, KeyBank and CIBC.
As a member of National Association of Mortgage Brokers, Randy has earned the Lending Integrity Seal of Approval. He educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy as well as the Daily Dollar newsletter. A licensed mortgage professional, Mitchelson also founded Trinity Home Financing, LLC.
He is owner of Estero, Florida based National Web Leads, LLC, an internet lead generation service matching consumers with lenders for auto, cash advance and other financial products. Through its network of partners, National Web Leads delivers innovative Web 2.0 performance marketing solutions to advertisers and affiliate marketers.
Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY. He is a founding member and Finance Chairman of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc. He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.
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