[Bruce]

Obtaining a mortgage when self-employed and ready to put the business on hold for 4-6 months is difficult but not impossible. Here is how lenders assess and approach this type of situation:

Relying on Only One Year’s Tax Returns

FHA and Conventional Loans:

• In most situations, lenders request at least two years of taxable income returns for the self-employed to ascertain that the individual is earning a steady income.
• Nevertheless, other lenders are positive, especially concerning the FHA, where one-year tax returns are accepted.
• This holds as long as the individual has been self-employed for at least a year and the tax returns for that year have positive figures.

Non-QM Loans: Non-QM stands for Non-Qualified Mortgage. Non-QM loans make the qualification criteria less stringent. One may also qualify using a year’s tax return or a bank statement. However, non-QM loans come at higher interest and require a bigger down payment.

Effect of the Business Closing

Income Stability: For reasons attributable to other income sources, lenders would also be looking to satisfy themselves by ensuring a permanent and relatively stable income, especially for self-employed borrowers. Interruption of normal activities by taking a break or temporarily closing the business could cause you to have concerns about your capacity to repay the loan even if you have good tax returns for that one year. It is expected that the lenders will want to know what you will do to earn income during a business closure.

Explaining the Gap: In this case, the lender will expect you to submit a letter outlining why you are abandoning the business, how long you intend to do so, and how you expect to fund your operations for that duration.

Compensating Factors

You realize that, because of the closure of your business, you will be incurring some risks. As such, you need compensating factors to counter the risks.

Larger down payment: In most cases, the more the down payment (e.g., for instance, more than 25% on the first shooting), the lesser risk that the lender takes on you

Strong assets/reserves: To qualify for the loan even when the business is not operational, it is important to have enough asset reserves to sustain mortgage payments for several months.

Low Debt-to-Income (DTI) Ratio: Keeping a DTI ratio within manageable levels will help demonstrate the ability to service the creditable amount when the business is up and running.

Alternative Loan Options

Bank Statement Loans: Several lenders offer bank statement loans meant for the self–employed, who receive self-employment income rather than their tax returns to determine income. This could be an option if you’ve been earning high income for several months and plan to shut down the business for now.

Non-QM Loans: These loans allow borrowers to qualify differently, such as not requiring a traditional income verification. If you intend to close your business, this may be a great option since you had a good income last year.

Preparing for the Application

Stay Current with All Payments: Ensure you are current on all debts and obligations, including taxes and other loans.

Provide Strong Documentation: In addition to your tax returns, be ready to provide additional documents such as profit and loss statements, bank account statements, and a projection of how you intend to finance yourself during the business’s closure.

Summary:

FHA and Conventional Loans: Requiring two years of tax returns is common. However, a few lenders may require one year for reasonable income and compensation factors.

Non-QM Loans: More flexibility and a better feeling regarding the closure of your business considerations.

Lender concerns: You must discuss how you will survive without income during the period your business will be closed. To calm the lender, you may need to make better deposits or have more reserves.

Given your explanation, are you interested in targeted lender options or structural tactics to optimize your mortgage application?

[Bruce]

Even with a 590 credit score mortgage in Texas, you can be approved for some mortgage loans. Still, the mortgage amount you qualify for depends not only on your credit rating but also your income, DTI ratio, and the loan to value.

FHA Loan

When you have a 590 credit score, you are already in the range for an FHA loan geared towards the lower end of the market. This is what you should know:

Down Payment: With a credit score of 590, you may be able to get the minimum 3.5% down payment required for the FHA loan.

Loan Amount: Each state determines its loan limitation based on certain criteria determined by the FHA. For instance, in Texas, the loan limits for single-family homes in most counties range from $498,257 to $809,150 and can depend on the county. However, the actual loan amount you will be approved for will be determined by your income, DTI, and property value.

DTI Ratio: The standard DTI ratio acceptable by most lenders is 46.9% front-end and 56.9% back-end. At the same time, age factors that might affect this DTI allowance include compensating factors serving as the main rationale, such as large down payments or savings.

Conventional Loans

Conventional loans usually present the highest challenge as they require a very high credit score, and with a score of 590, it might prove to be rather difficult. However, the minimum credit score on conventional loans is 620.

Larger down payment: In this case, you must have a 3-5% down payment.

Higher interest rates: Regarding Conventional loans, lower credit ratings imply greater risk to lenders and, thus, higher rates. This means your monthly payments will be high. So will the maximum amount that you would be entitled to?

Non-QM Loans

This is where non-QM (Non-Qualified Mortgage) loans come into play or for those who are unable to qualify for FHA or conventional loans. Such loans are made available to individuals who do not adhere to conventional mortgage norms, with lower credit scores being the main consideration.

Such loans:

• Credit guidelines may be less stringent.
• Often, a higher initial payment is made (usually 10%-20%).
• Don’t come cheap.
• These loans carry relatively higher rates.

Loan Estimate Example for FHA

• Suppose you want a loan to purchase a $300,000 house in Texas.
• You would pay about $10,500 to cover the mortgage down payment, which would be 3.5%.
• Your maximum loan request would be $289500.
• However, your approval will be altered if other factors, such as your income and debt-to-income ratio, are considered.

Summary:

FHA Loan: This is probably your best option. It requires a down payment of 3.5%, and the loan limits are reasonable.

Conventional Loan: A higher credit score and a larger down payment are required to get approved for this loan.

Non-QM Loan: This could be a very useful resource if you cannot take other mortgage categories but have much more down payment and higher interest rates on loans or the cost of loans.

Would you like to see Texas FHA loan limits for specific counties or simulate different loan amounts?

[Bruce]

You can get an FHA loan while still in Chapter 13 bankruptcy if you meet certain conditions. HUD, the parent of FHA, allows borrowers in Chapter 13 bankruptcy to obtain a mortgage, provided they meet the following criteria:

Payment History

• You need to have completed at least 12 months of on-time payments on your Chapter 13 bankruptcy repayment plan.
• You meet this requirement since you’ve made one year and four months of on-time payments.

Trustee Approval

• You will need written approval from the bankruptcy trustee to take on new debt, including an FHA mortgage.
• Your bankruptcy trustee must confirm that you’re financially stable enough to manage the bankruptcy payments and a mortgage.

Manual Underwriting

• Because you’re still in active bankruptcy, your loan will likely go through manual underwriting.
• Lenders will assess compensating factors, such as:
  • Stable employment history.
  • Low debt-to-income (DTI) ratio.
  • Demonstrate financial responsibility during your bankruptcy repayment period.

Credit Score

• While FHA loans are more flexible with credit scores, having a score of at least 580 will give you better terms.
• Some lenders might even accept lower scores with compensating factors.
• If your credit score is below 580, you may still qualify but need to make a larger down payment (typically around 10%).

Other Loan Requirements

• You’ll need to meet the basic FHA loan requirements, such as a minimum 3.5% down payment (if your credit score is 580 or higher) and verifiable income to ensure you can afford the loan.

Lender Flexibility

• Not all lenders offer FHA loans to borrowers in Chapter 13 bankruptcy.
• It’s important to find a lender experienced with this type of situation.

After Discharge or Dismissal of Chapter 13

• Suppose you wait until your Chapter 13 bankruptcy is discharged or dismissed.
• In that case, you’ll need to wait at least two years from the discharge date before qualifying for an FHA loan without additional conditions, such as trustee approval.

Would you like more information on finding lenders specializing in FHA loans for Chapter 13 borrowers or help preparing your documentation?

[Bruce]

Eligibility requirements for unsecured credit cards can differ from one issuer to another. However, there are some factors that most credit card companies have in common. An overview of such ‘common’ eligibility criteria can be provided as follows:

Age:

Applicants must be of majority age and above (18 or 21, depending on location. min).

Credit Score: Generally, an unsecured card is available to applicants for a credit score of 600 or above. Generally, higher than 700 scores will benefit cardholders from rewarding and better cards. Unsecured cards are targeted at fair credit holders and cover scores of 640 and higher.

Income: Stable and verifiable income must be shown. A minimum monthly income is required. Income varies depending on the card issuer and the type of card applied. Debt to Income Ratio (DTI): Preferred ratios should be lower, with the majority being 40-50% and lower.

Employment Status: Either steady employment or a dependable source of income is mostly a requirement. Citizenship/ Residency: Most cards require housing, US citizenship, or permanent residency. A few may be offered to non-resident aliens with an SSN or ITIN.

Credit History: Which considers the age and structure of the credit history? Absence of recent bankruptcies, defaults, or any serious delinquencies.

Previous Relationship with Issuer: A few issuers prefer applicants with accounts with them.

Address Stability: The requirement for a permanent residential address may appear on some application forms.

Educational Background: Some student credit cards might require verification of enrollment in higher education.

Financial Responsibility:

There has been no misuse in terms of abuse of credit cards and or fraud. Timely payments in the past 24 months are a must.

Existing Credit Limits and Accounts:

The number and type of existing credit accounts can also be the qualifications.

Recent Credit Applications:

A lot of applying for credit can make it hard to get approval.

Specific Card Requirements:

High-end credit cards can sometimes include additional requirements, such as premium income or even the best credit accounts.

Relevantly, the applicant should remember that the fact that state requirements have been satisfied doesn’t guarantee he will be granted a credit card. Every issuer has its own rules related to underwriting. Some, but not all, issuers provide a pre-qualification function to check the potential for getting a credit card without having hard credit checks done.

For those with limited or poor credit history, an affordable credit builder card or student credit card (if applicable) may be offered. These cards can assist in establishing credit and pave the way for applying for an unsecured credit card.

Every cardholder needs to observe the following steps before proceeding with an application:

Ensure that the information used to generate a credit score is correct, especially if a firm advises or assists in improving a client’s creditworthiness.

Identify certain cards that are suited to your credit background.

Pre-qualification helps when there is an opportunity to do so.

Remember to decrease the number of applications because of the consequences of several hard pulls on your report.

Lastly, always remember that prudent credit card management is vital to building and maintaining one’s credit health.

[Bruce]

VA Streamline Refinance Application, popularly known as the VA IRRRL, is a streamlined refinance loan for borrowers with a current VA loan. No income documents or appraisals are required. Homeowners with a current VA loan can do a VA streamlined refinance with a lower rate to lower the monthly mortgage payment, where they can save tens of thousands of dollars on the course of their VA loan. Most VA streamlined refinance (VA IRRRL) takes a week to two weeks to close. VA streamlined refinance is unlike a traditional VA loan mortgage process. The only documents required are the VA loan monthly statement and mortgage verification. Suppose the current mortgage rate is 0.75% or lower than your existing VA loan. In that case, you will benefit from a VA streamlined refinance mortgage. There is no money out of pocket for closing costs, and most homeowners get to skip one full month of mortgage payment.

Interest Rate Reduction Refinance Loan (IRL).

As follows:

Check Eligibility Infrastructure

• VA Level Qualification: A service member qualifies as an applicant under the VA loan program.

Current Loan: A VA Streamline Refinance is meant to be used by someone with a current VA loan. Documentation Certificate of Eligibility COE

• This can be either from the VA or from the lender.
• Financial Documents Below are some of the documents that are important about financial documents.
• Latest mortgage statement.

Research Lenders

Find Lenders for VA Approval Loans.

When it comes to getting VA loans, searching for proper lenders or banks that make VA loans is necessary. This is because these are the people executing the transactions. There is a site where information about VA mortgage lenders and other approved services is available for veterans.

Compare Rates and Terms: As much as the process of gearing towards procedures that involve the loan refinancing, be sure that you do indicate the part, the interest, and the period that the equity loan to be sought will be.

Submit Your Application For The Loan

Fill out the Application: Once you have decided about the type of loan you wish to take from a specific lender, you complete the application with the lender. Most of the time, this is expressed earlier by someone at the office or on the web.

Choose the Type of Loan: In this case, you would wish to have VA Streamline Refinance information.

Get Supporting Documents Drafted

Filed documents (handing over)—Organization documents will be filed with relevant lenders when necessary and within control. If required, such documents are on hand in other places. Such documents may include COE and recent mortgage ethics, which center on making appointments and skipping offices to identify clients’ income and pay slips.

Review Loan Estimates

Loan Estimate: During the processing of the application for a special loan/application, the applicant will be provided with a Loan Estimate that indicates other costs involved apart from the principal. Also, some other related terms will be necessary during application processing for the original cost of that loan.

Compare Offers: You should keep some Copies of Scans of the Loan Estimates or any other documentation issued by other Loan Lending Institutions to protect yourself from being put in an untenable position.

Loan Processing

Timing: The applications shall be submitted to the lending institution after all the documents are completed, including verifying the transactions and the applicant’s credit history.

No Court Document Required: Due process must be followed. For instance, an appraisal of the house for the reason of VA Streamline Refinance is not performed as a traditional mortgage process. No income verification or appraisal is required. Therefore, the entire process can be completed in a relatively short period.

Closing the Loan

Awareness comes in after the loan has been closed. Once the VA streamline refinance loan is processed, a closing disclosure is issued to you. This contains the repayment of the loan plus other extra charges that you are likely to incur in closing the loan.

Sign Documents: A closing is normally scheduled at your home, and a closer will stop by with the VA streamline refinance mortgage documents.

Start Making Payments

Payment of New Loan Amounts: Payment is generally within 45 to 60 days after closing a new loan. Cash-out is not an option on VA streamline refinance.

[Bruce]

Unfortunately, there are millions of people who don’t care about the qualifications of the Presidential candidate. They will vote someone like the biggest hypocrite brainless lying sack of shit that will run the United States into the ground than vote for Donald Trump 🙄

[Bruce]

Thank you, Sir John Grimaldi. I couldn’t have said it better when you ask people why they hate Trump. Ahhh? They have nothing to say. On the flip side, you ask Joe Biden or Kamala Harris what have you done that America and the citizens of the United States benefited that will make them a great leader. Again silence. Kamala Harris snaps back with conviction and says the Biden-Harris Administration has lowered inflation from 9% to 3%. The Biden-Harris Administration lowered Unemployment to 3%. The Biden-Harris Administration created Bidenomics, and it works. I can go on and on. However, these claims are not true and very misleading. We have no place for corruption. Weaponizing the Department of Justice, the IRS, Border Security, for political gains is not acceptable. Censorship and changing the Constitution have no room in the United States. The good guys need to speak out. The good guys have been too quiet for too long.

[Bruce]

What is one’s borrowing power, and how does co-signing further it?

Every other aspect related to co-signing should be addressed here, and this covers most of the questions asked. Include more than one if it is a minor point.

No, when a person co-signs a loan, the amount cozied is weighed against the payoff mailed in but also against the person’s debt burden.

Duties & Responsibilities: The co-signers legal undertaking is that if the installation borrower defaults, even when she has broken the agreement, every dollar advanced to the installer will be returned, meaning they also extend obligations.

Credit Report: All the major loans taken out by the ISO, together with this loan, have been included in the credit history of all databases, with outstanding balances and payments.

Financial Obligation/Responsibility: Lending institutions consider any amounts in the possession of the primary borrower and the co-signers to be borrowed because they see co-signer loans as the borrower’s debt, which, therefore, becomes the lender’s responsibility.

Implications:

Risk of default: If the principal borrower cannot service the debt, be it in part or fully, all these payments will be your responsibility, negatively affecting your credit score and employment opportunities.

Impact on getting a further loan: This additional debt may adversely affect the ability to qualify for any new loan or credit facility as it only increases the weighted average debt level.

Does the refusal of a Loan Application Effect Affect the DTI Ratio?

Declaratory obligations: The debt-to-income ratio is attributed to certain obligations that the creditor will apply to assess an individual’s ability to make periodic payments until each outstanding debt is settled. This is done by calculating the subdivisions of debts of monthly repayments to that of earnings monthly.

Consequences of Co-signing on DTI:

Including Co-signed Debt:

In calculating DTI, lenders usually incorporate into existing obligations even the installments for loans such as housing or educational loans accepted by the borrower except for the main borrower.

Example:

Monthly Salary: $5,000

Money owing characterized as credit card debts: $1,000

Monthly payment is taken to co-sign for an automated vehicle: $300

Total Monthly Expenses concerning Debt Repayment:

$1,300

The outlook of DTI, Considered figures/Average Revenue*100, 1300/5000, 26%

Potential Challenges:

Increased DTI:

• The co-signed loan also totals DTI.
• This additional factor.
• However, it can sometimes disadvantage the holder.
• In this case, the co-signers heavily relied on mortgage loans and all lenders.
• Including mortgage providers who have DTI ratio issues, which one may not qualify for.

Sure, let’s help you with it.

Here’s the elaborated text about Loan Approval and Possible Exceptions: Loan Approval:

Some lending institutions may raise interest due to increased risk. In contrast, others may avoid lending to borrowers with a DTI ratio that exceeds the harm threshold.

Possible Exceptions:

Excluding Co-signed Debt from DTI:

Proof of Payment by Primary Borrower: Knowing this fact does not make it surprising that some lenders would want to count a co-signed loan against your DTI. But in such cases, this co-signed loan and DTI are excusable.

Requirements:

Payment History: Account of specific months’ payment records to support evidence that the primary borrower has made payments.

No Late Payments: The debtor should not have any late or missed payments. The particular time limit applies to a single credit period only.

Independent Payments:

• Payments must be from the primary borrower’s account only.
• There is no joint account in which payments or non-payments could be made by one or both parties.
• It is not a secret that policies differ from lender to lender.
• This should be considered while bargaining with your prospective lender.

When you co-sign an Auto Loan, does that affect your credit at all?

The co-signing of auto loans has several impacts on the credit history of the co-signer, as listed below:

Positive Impacts:

Timely Payments:

• In case the primary borrower meets all repayment obligations that were not his or hers,
• Repayment can be for a more positive history or default deter because it adds responsibility to a negative history.

Credit Types: Having separate installment debts other than credit cards, such as auto loans, can widen the types of credit, which are also considered in credit scoring models.

Negative Impacts:

Missed or Late Payments:

Credit Score Shortfall: Even if the borrower made the payment, any payment made late (i.e., after the due date, which entails filing the usual risks of reporting) will entail all payments. This includes the ones you made, making the credit score deteriorate.

Derogatory Marks: The worst penalties combine paying the bill late over many months and eventually sending the account to a collection agency or writing off the account.

High Reliance On Credit:

Credit Card Utilization Ratio: The additional debt incurred increases debt utilization. This harms the credit profile more than good since that ratio is quite high.

Future Borrowing: Due to the extra debt, the perception of the risk on the debtor increases. This negatively impacts how new borrowing will be extended to you or the conditions.

Hard Inquiry:

Credit Check: First, you should know that when you co-sign, a hard inquiry is placed on your credit history, which may have a detrimental impact on your credit score in the near term.

Other Considerations:

Duration of Impact: Such information will remain on the credit report until the current obligations are stated as paid, the loan is refinanced, or a loan settles on the card.

Limited Control: Unfortunately, even though people tend to make timely payments, more of the liability lies with the co-signer, whose power in making payments is minimal. Therefore, there is a need to trust in the primary borrower’s repayment ability.

Key Takeaways:

Financial Responsibility:

• This is a great way for people to afford homes and obtain loans by applying simultaneously and augmenting one another’s repayment capacities.
• In this instance, all participants will bear responsibility for the debt.
• Hence, it would affect each individual’s DTI and credit profile.

Impact on Loan Applications: Co-signed debt is familiar and will usually be dealt with as soon as additional loans are taken. Hence, getting more loans after such debts are taken is possible. The repayment of the co-signed loan will affect the borrowing limit and the loan specs on approval of the borrower who applied for the loan.

Risk Assessment: This refers to evaluating how the co-signer factors their repayment parade by looking into the fact that additional repayment capacity will be available and the likelihood that the primary borrower will be faithful in repayment.

Monitoring: Obligation fulfillment depends on the loans taken alongside the outstanding obligations on the credit report, which must be reviewed occasionally to ensure that loans are observed and that credit remains in good standing.

Communication with Lenders: In some circumstances, dealing with the lenders could be helpful. They will remove co-signed debts from the DTI calculation, but additional papers are needed.

Recommendations:

Assess Financial Stability: If borrowing was needed, it is safe to ascertain the point of saying they will be able to repay the loan as much as possible.

Set Agreements: Agreements shall bear an outline with the names of the co-signer, the main debtor, and the terms the co-signer agreed to.

Monitor credit Regularly: It is advisable to monitor credit reports for any early signs of trouble and address them as soon as possible and correctly.

Consult Financial Advisors: If you are uncomfortable with this, it would be advisable to seek the help of a financial advisor so that you fully understand the implications of co-signing.

Accepting the term to co-sign a loan is not something one should take lightly, as it has consequences and impacts on one’s finances and credit ratings. Be prepared to weigh the risks and benefits of the situation and make plans to protect you financially if you choose to become a co-signer of an auto loan or other types of loan.

Please feel free to reach out for any further queries or clarifications on financial subjects!

[Bruce]

Earnings and Expenses of Self-Employment

Can one legally regard a self-employed monthly salary as an expense instead of treating it as their net earnings?

No: Self-employed persons should separate income from expenditure. Net income is determined after deducting all expenses from gross income.

Is it possible to claim business expenses without self-employment income?

Yes: Self-employment business expenses can be claimed irrespective of the fact that you do not have any income, but this would lead to a loss over a year.

Is self-employment income a gross or net income?

Net: For purposes of taxation, self-employment income is usually determined by taking gross income and deducting net business losses.

Can payroll be deducted as a business expense?

Yes: Salaries and wages paid to employees are included in payroll, which is an expense for the business and can, therefore, be deducted from tax.

Is it possible for a self-employed individual to pay oneself a salary?

No: Self-employed individuals do not salary themselves but can draw or take distributions from business profits.

Filing tax returns according to the law can be challenging because you have to keep records that are up to date. It is important to seek advice from a tax professional to avoid legal issues and maximize the benefits you are entitled to because of your business activities.