Determine mortgage income for travel nurses
The effects of COVID-19 are still being felt in the economy in many ways, like housing shortages, missing chips to sell new cars, and getting contractors for household renovations. Here is a weird one that I personally experienced in the condo I live in, where I am on the board: we hired an asphalt company […]
How to Calculate Income for Self-Employed Borrowers
There are four steps on how to calculate income for self-employed borrowers. Borrowers who are self-employed have two distinct roles in the process of generating their personal income. Due to the dual nature of their daily roles of income generation and the higher risk, it can prove to be more challenging to determine their income […]
Can a borrower use K-1 income with under 25% ownership?
Can a borrower use K-1 income with less than 25% ownership? Recently we have received some questions about if a borrower can use income they get from a K-1 when they have less than 25% ownership. To best answer this we need to break down the elements of getting a K-1 and what the mortgage […]
HOW TO DO A MORTGAGE INCOME ANALYSIS
One of the lessons I learned during my underwriting career is that the most likely reason a borrower defaults is due to their DTI ratio (Debt To Income), or stated in plain english you “can’t afford” the payment on your house. This is because the DTI either starts off too excessive or becomes too excessive […]
Freddie Mac Bulletin 2022-18
Freddie Mac Bulletin 2022-18 offers new method of income calculations for 1099 borrowers. The United States is looking at earning income much differently than it did just a decade ago. With industry mavericks like Uber changing the way Americans get around cities, they and other companies led the way into our new Gig Economy. The […]
FHA Mortgagee Letter 2022-09
FHA has recently amended their guidelines to allow more flexibility to calculate income for borrowers whose variable income was affected by the COVID 19 pandemic as announced in mortgagee letter ML 2022-09. FHA guidelines tend to focus on two years averaging of income, many borrowers were affected in the last two years due to COVID. […]
How to complete a liquidity test
When completing income analysis for self employed borrowers there are a few key steps that must be followed. A liquidity test must be performed before your borrower can use self employed income from a K-1 attached to a 1065 or 1120S tax form. How to complete a liquidity test? Follow these steps. Step one Make […]
K-1 Income For Self Employed
K-1 income for self employed borrowers is one of the most asked questions we receive in our inbox. We understand, it’s complicated, and to be honest we are mortgage professionals not tax experts. But since self employed individuals make up a good percentage of the possible borrowers in the market, we definitely need to understand […]
Lykken on Lending – Pre-Qualification Letter
Our managing director Michael Whitbeck was invited on the Lykken on Lending podcast with LenderTool Kit’s Brent Elmer to talk about the importance of Verified Approval Letter versus a Pre-Qualification letter. These two things may sound the same but they are very different and can have severe consequences to any lender’s reputation in the market. […]
IRS Changes for Meals and Entertainment
On December 27, 2020 the IRS announced a two-year exception as part of the Consolidated Appropriations Act that impacts the meals and entertainment deduction rule for businesses. This exception will be reflected on the 2021 and 2022 tax returns. How does this rule affect the way underwriting will look at self-employed borrower’s income? Let’s go […]