Deanna Valeo

Self Employed Borrowers – what can they count for income? May 5, 2010

Self Employed Borrowers – what can they count for income? 

One of the biggest issues a loan officer faces when working with self employed entrepreneurs is getting enough information up front to calculate their mortgage income.
Currently 2009 and 2008 tax returns are needed to get a new loan. Around June some Jumbo products will require YTD Profit and Loss statements as well. It is important to note that the income that carries over from a self employed persons business return to their personal tax return very seldom equals the mortgage income they can use to qualify for a purchase.

We recently had a client that showed they made $125K annually on their personal return – after making adjustments their mortgage income was $554K. In another instance we had a client whose 2009 income showed at $64K on their return the usable income was only $45K.

It is imperative that your self employed clients (and you for when you buy) have their tax returns evaluated so the true mortgage qualifying income can be calculated before making an offer. It is just important to work with an experienced loan professional that can do this quickly so you find your client a home, write a contract and close on-time. 

Accessible | Program Expertise | On-Time Closings 

The Valeo-Croy Team
Deanna Valeo and Todd Croy
NMLO License #91421 and #91428
Phone 704.366.7711  or

Buyers do not apply for any additional credit before closing on your new home loan! May 24, 2010

For many Realtors and lenders it has been a common practice to advise our clients not to finance anything before closing – such as furniture or a car. However with changes taking place at Fannie Mae (and soon Freddie Mac) with the new “loan quality initiative” any new credit applied for may be deemed enough to deny an already approved loan at the last minute. So saving 10% at Target by applying for their new credit card may disqualify some buyers on the bubble.

The new Fannie Mae initiative is to go into practice on June 1, 2010 and the result may very well be a last minute reorder of a credit report right before closing to see if borrowers have applied for more credit since the initial application date.

Mind you Fannie Mae states that the credit reports we pull are still good for 90-days however they will make lenders (mortgage bankers and banks) accountable for any new credit found applied for during the application process that affects the loan quality. What this really means is plan on all lenders going to the second credit pull.

So what does this mean for borrowers?

  1. Do not apply for any credit once you have begun shopping for your mortgage. You can shop with other mortgage providers however be prepared to explain these credit inquiries.
  2. Make sure to understand the credit policy of the lender you are working with. Many brokers have this last minute credit re-pull as a requirement by the lender funding the loan; however, this will be new for lenders that close on loans with their own money such as banks and mortgage bankers (Like Cunningham and Company).
  3. Debt/Income ratio standards are tighter than ever, expect underwriters to be very conservative with the new policy being enacted.
    The Valeo-Croy team believes in a thorough prescreening policy of all income and debts to make certain you will qualify for your new home loan and close on-time.

Continued worries about economic growth and the need for goverenments to slow spending in Europe caused equity markets to lose value last week. The result was a movement to safety last week we saw mortgage rates at their lowest point since December 2008.






@ The Valeo-Croy Team, we are here for you.

The Valeo-Croy Team -  (704) 366-7711

Todd Croy - NMLO license #91428
Deanna Valeo - NMLO license #91421

Accessible | Program Expertise | On-Time Closings                             
The Valeo-Croy Team and Cunningham and Company Mortgage Bankers are Equal Housing Lenders.

This information is for illustration only. It does not constitute an application for a loan or an offer or commitment for Cunningham and Company to make a loan on these terms. Interest rates are subject to change until an application is completed and you lock in your interest rate. The figures noted are estimates and may vary depending on discount points, taxes and insurance. Programs, terms and conditions are subject to change without notice. Mortgage loans are subject to credit qualifications. Normal credit standards apply.   Date: 5/24/2010