Archive for October, 2008
FHA Loans - Income and Employment Requirements
Posted by Paul Gonzales | Currently 1 Comment »
This is the third in a series of six posts that deal with important aspects of FHA financing. The first post provided an overview of the program while the second post detailed FHA credit requirements. This post will discuss the income and employment requirements necessary to obtain an FHA home loan.
Income Documentation
For employees this is quite straightforward. Copies of the most recent paystubs covering at least one month and W2s for the previous two years are required. Complete Federal income tax returns for the previous two years may be required as well.
For self-employed people, signed copies of personal tax returns for the previous two years are required. If the business is a legal entity such as an “S” or “C” corporation, partnership or other legal entity then two years of business tax returns are also required. A signed year-to-date Profit and Loss statement (P&L) will be needed to complete the income documentation. FHA guidelines state that 25% or more ownership in a business is considered self-employment.
Types of Income for Employed People
The lender will review the paystubs together with the W2s and tax returns to establish a baseline amount of income as well as stability of the income. In general, if base income is increasing they will likely be able to use the current income amounts. On the other hand, income that is declining over the past two years will result in an averaging of the income. A significant decline in base income will require a written explanation.
- Overtime - to be counted it must have been relatively constant for the past two years as well as currently. There must be the prospect that it will continue and the employer will be required to state that it is likely to do so on a written Verification of Employment. If used it will be averaged over time and added to the base income
- Bonuses - the rules are similar to considering overtime.
- Commissions - will be averaged over the prior two years and must demonstrate reasonable stability; tax returns will be reviewed and unreimbursed business expenses will be deducted from the income
- Child support, alimony and spousal maintenance - such income can be included provided that it can be shown to continue for at least the next three years. It must be documented by a divorce decree, court order or separation agreement and actual receipt of the income documented by cancelled checks, bank statements or other positive means.
- Retirement income - Pension and Social Security income is acceptable and must be documented by award letters, IRS form 1099s and current “pay advices” (stubs). Again, there must be the prospect of continuing for at least the next three years
- Insurance and government income - workman’s compensation, long-term disability or other similar income must be documented and expected to continue for at least three years
Self-Employed Income
Income and expenses will be analyzed from the past two years tax returns and current P&L. The earnings will be averaged over this time period. Income that appears stable or increasing will be considered, whereas declining earnings may not be considered acceptable.
Minimum Length of Employment
Stable employment in the same general field of work or business for two or more years is considered minimum. Going from being an employee to self-employed, even in the same line of work, gets special scrutiny. A person who has been self-employed for at least one year AND has at least two previous years of employed experience in the same field may be considered. Formal training or education in the same line of work during the prior two years may be considered in lieu of employed experience.
The next post in this series will discuss the financial assets and down payment requirements for obtaining FHA financing.
you can contact Paul Gonzales at (800) 775-7334 or paulforloans@aol.com
Popularity: 53% [?]
Related Posts: CW Mortgage, Financial news, Home Loans, Interest Rates, Mortgage News
An Added Tax Advantage for Homeowners!
Posted by Carol Carey | Leave A Comment »
For those first time* home buyers still skeptical whether NOW is the best time to buy, you can add one more to the growing number of reasons to answer YES when asking yourself if NOW is the best time to purchase.
Offered as a stimulus to help the market’s recovery, the advantage I am referring to comes in the form of a TAX CREDIT available to qualifying buyers making less than $150,000 joint annual income when purchasing a primary residence between April 9, 2008 and June 30, 2009.
Whether it’s a new home or a resale, or a single-family residence or condominium dwelling doesn’t matter as long as it serves as your primary residence.
The TAX CREDIT is actually 10 percent of the purchase price or $7,500 - whichever is less - for married taxpayers filing jointly. For married taxpayers filing separately or single taxpayers, the maximum credit is $3,500. 
You can’t just sign a contract to buy a home by June 30, 2009, cutoff date, you must actually close escrow by that deadline to qualify to receive your TAX CREDIT. And the law does allow taxpayers to treat a sale closed in calendar year 2009 as if it occurred on December 31, 2008, meaning you can elect to accelerate to this year’s tax return!
This isn’t a tax deduction, which is subtracted from the amount of your taxable income, it’s a TAX CREDIT, which equates to a dollar-for-dollar reduction in what you owe, and you have 15 years to repay it at the rate of $500 per year.
However, you won’t be required to start making payments until two years after the credit is claimed. If you sell the home during the 15-year payback period, the remaining unpaid credit balance is due from the proceeds of the sale.
If this interest-free loan from Uncle Sam doesn’t sound like such a good deal, consider this example posted by the NAHB:
Assuming an interest rate of 7 percent and a maximum credit, you will save $4,200 in interest payments over the full payback period. Compare this to financing $7,500 as part of a 30-year, 7 percent mortgage, the credit is worth more than $8,100 in interest payments.
So buying your long awaited home NOW means you could wipe out what you will owe in taxes this year by as much as $7,500, or you may even qualify to get a check in the mail from Uncle Sam.
*You qualify as a First Time Homebuyer if you have not had an ownership interest in a primary residence in the three years immediately proceeding your closing date.
Popularity: 34% [?]
Related Posts: Builder Services, Condos & Townhomes, DiMaio Estates, Education, Financial news, New Homes
San Diego Foreclosures Filings Down? - Get The Facts
Posted by Diane White | Leave A Comment »
According to an article posted by Inman News recently, RealtyTrac said that foreclosure filings were down 12 percent nationwide in September.
California, which accounts for nearly one-third of foreclosure activity, recently passed legislation that requires lenders to contact their borrowers 30 days before filing a notice of default. This could explain why such a dramatic 51 percent drop in notices last month.
The article further goes on to state that this may only delay the process and may not alleviate the continuing influx of foreclosures.
Read the entire article: Foreclosure filings down 12% in September
The County of San Diego Assessor/Recorder’s Office also states the decline could be due to the requirements of the new legislation.
This became effective September 6, 2008. Read their letter here:.
.
The Assessor/Recorder’s office also states that over 50 percent of the homes that are served a default notice do go back to the bank. A hefty 56.23% of the 27,990 Notices of Default filed through the month of August, or 15,740 went into foreclosure. Click the image to read the full report.
Some other interesting notes:
- Trustee’s Deeds (Foreclosures) recorded thru September were 15,740
- Total Deeds recorded were 88,437
- That means only 17.80% of home sales this year were bank owned/foreclosure sales!!
There will undoubtedly by more sales of homes that were foreclosed on, and 17.8% is a still a high number, but the facts are here in the report. This dispels the myth that over 50% of the homes sold in San Diego are foreclosures…doesn’t it?
If you would like me to research particular areas, please contact me at Diane@DianeWhiteSanDiego.com or simply leave a comment to this post.
Popularity: 42% [?]
Related Posts: Area Information, Area Statistics, Buyers, Financial news, Foreclosures, Market Trends, Real Estate News, San Diego
YOU GOT STRESS? Here’s How to Cope!
Posted by Pam & Joanna | Currently 1 Comment »
There seems to be a virus going about at the moment called STRESS. I am meeting way too many people that are on the edge right now. It’s hardly surprising given the current financial situation of the country.
Worry and stressful thinking can affect our well being. So we must do something to reduce our stress, especially in times like now.
If you don’t take the time to enjoy a few minutes of relaxation - begin today. There’s no time like the present moment. Sometimes I think people take better care of their cars than they do their bodies. They keep them clean, well fueled, lubricated, and in good working condition.
Think about it. What do you do when your car gives you a warning that something is wrong? But what about your body - what If you let all this stress get to you over time ? The effects will be devastating on your health, your family and your life!
I began practicing yoga about seven years ago, it is one of the best things I ever did. So I just want to share a little of this with you, perhaps it will help give you some peace of mind.
Absolutely anyone can do yoga,the fat,the thin,the beautiful,the ugly,the old, the young,the sick,the healthy,the rich,the poor. You do not have to be fit or flexible - I have taught yoga to people in wheel chairs and people who are confined to their beds.
How does yoga heal your body? - Almost immediately your body responds positively to deep breathing and stretching. You begin to relax. 
The postures help you to become strong and flexible.Your internal organs are toned. Regular practice also helps to regulate your metabolism and the functioning of your glands and organs as well as strengthening the nervous system and mind. It will move you towards positive thinking which creates an attitude of respect and self acceptance towards your body so that you can take better care of it. You achieve overall balance in your life which over time time will help you to become mentally stronger and able to deal with the stressful situations in your life.
So find a teacher who you enjoy and stick with it - try some gentle relaxing yoga - it will make a difference to your life……
Popularity: 22% [?]
Related Posts: Activities & Events
