As more and more people pursue a side hustle to supplement their income, one smart investment option that many people are diving into is the world of rental property. The long-term passive method of collecting monthly rent gives stable and reliable returns in today’s market – often better than random investments or flipping homes!   From a mortgage originator’s perspective, taking the time to find and assist these potential landlords in making these investment home

New Year’s  is an interesting holiday to me. It is the only holiday that seems to prompt the most change in people’s lives. When you think about it, does anyone say, “This Thanksgiving I am going to start doing push-ups every day”? Some New Year’s changes occur whether you plan them or like them or know about them!   In the mortgage world, the first few months of the year require us to pay closer attention

When I was in the Army, getting instructions from Army manuals or from higher ranks was often “clear as mud,” meaning that even though you were given the instructions and read them over and over, you still required additional help just to figure the task out. Over the many years I have been underwriting, some very common incomes for employed borrowers definitely have some “clear as mud” instructions on how to calculate the correct answer. 

ACES reports income errors lead loan defect reasons 11th straight quarter When I write a blog headline, I try to balance the blog name between informative and relevant to give the reader a good idea of what the blog is about and a reason to click on it.  Personally, I find too many articles today in all areas of life that have a shocking headline, then you read the article and there is a big

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 to redo the blacktop and add new curbs to our common parking.  Well, we got about halfway done and had

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 after the loan closes.  Some of this is out of the hands of the lenders and is due to life

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 effect this has had on the mortgage business is to create a group borrowers that do not fit into the

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.  This creates a challenge to get approved especially when the borrower’s income has likely improved as compared to during the

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 sure that the borrower’s business has stable sales and expenses that are generated for the borrower to earn income to