If you yourself or your borrower is a self employed borrower, they need to make sure they are working with an expert in the mortgage industry. With all the changes and the elimination of Stated Loans, the loan officer needs to know every possible item for add backs and take aways on tough and complicated taxes or they could waste a ton of yours or your clients time. I am a perpetual student and have committed to going over reminder courses constantly so that I become an expert in my field. Yesterday, I took another 3 hour course to remind myself of all the great tips that self emplloyed borrowers can use to get more income. Just that slight extra bit can make or break your file. Here are a few tips that help our self employed borrowers get approved that most loan officers don't pay attention to:
- Can't use profit and loss income for self employed borrowers, we have to use the most recent last two years full tax returns to pull average from. If you want to use a profit and loss, it has to be audited which can be very expensive.
- Must have K-1's for all partnerships or Corps that the borrower is invovled in.
- Tax returns in most cases will be required if : You are employed by a relative, make 25% of your income in commissions, and / or have unreimbursed expenses showing.
- In some cases, we can add back the difference of income between the lower amount and the higher amount on the w2 in needed
- We can normally always add back paper losses (i.e.: Depreciation, depletion, business use of home)
- If mileage is used we can count 23 cents per mile towards depreciation as well in 2010, 21 cents in 2009
These are just a few ways we can find that extra little money needed to get your borrower just below that debt ratio if they are over. We find ways to get loans approved and clear to close, rather than looking for ways to turn them down! Do you know of a self employed borrower that could use our assistance? Give me a call and I'm happy to review their returns.
Have a great week!
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