Update to the mortgage story. As I said earlier, mortgage broker Ron Schulz told me over the weekend that the biggest hurdle in mortgage financing now is finding mortgage loans for the self-employed. Those deals are near impossible because most self-employed work off K-1 income to control/limit taxes so when they go to get a loan underwriters get all red in the face and say, uh uh no way, this guy has no income.
Well, guess what the most hurtin’ home price range is out there? $750,000 to $1.8 million, right where a lot of successful self-employed want to be.
And look at this email I received from a reader today:
“I recently contacted a lender about purchasing a home for my parents. I told them that I would be able to put 50% down and wanted to finance the remainder. They told me that I didn’t qualify because this lenders policy is to average your income over the last 5 years. Needless to say, averaging income isn’t good for the starting business. They do not take into account the growth rate of a business. Not to mention that I too am a tax planner, so I do my best to make sure that my taxable income is as low as possible.
Ratio of loan to market value apparently has no relevance any more. Lesson learned: By the time I “qualify” for a loan, I will be able to pay cash for this home.”
Now here’s what really gets me hot. We have the Feds trying to keep us from a Double Dip, right, and yet, where’s the financing to allow people, self-employed people, to BUY homes? Not everyone gets a W-2, thought the Feds sure love those because they get their money first. Instead of encouraging responsible lending to this segment, they go and pass legislation that pinches mortgage brokers even harder and passes on more costs to the consumer!
By the way, on his show this week, Ron has special guests Curtis and Paige Elliot of Ellen Terry Realtors.