Mortgage Guideline Update | Documenting Self-employed borrowers
Finally some good news in the mortgage world! 🗞🗞→ Documenting income for self-employed buyers is returning to normal.
What does this mean?
In typical scenarios, borrowers who rely on self-employment income may now submit their most recent federal income tax returns as proof of income, as long as the returns are no earlier than 2020.
How does this help?
Covid-era rules for certain government-backed loans required self-employed borrowers to submit recent P&L statements, asset account statements, and more. It’s much easier for most to supply tax returns instead.
If you know of anyone who delayed a mortgage because of the extra documentation requirements, there’s still time to act while rates remain near historic lows. Please reach out with any questions or to make a referral.
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MarketMinute | How is new construction helping the inventory shortage?
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Private payrolls fell by 301K in January vs the expected 200K gain, according to ADP. The drop is blamed on the Omicron variant’s spread. |
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The core personal consumption expenditures price index, an inflation gauge watched closely by the Fed, rose 4.9% year over year in December. |
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Job openings totaled nearly 11 million in December, more than 4.6 million above the total unemployment level, according to the Labor Department. |
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Although housing inventory remains tight, single-family housing starts reached 1.123 million last year, the highest level since 2006. |
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Newly built homes made up more than one-third of homes for sale in December, the highest share on record, according to Redfin. |
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Purchase applications were up 4% last week, while refi applications jumped 18% for the week. Both were still lower than a year ago. |
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When it comes to homebuying, knowing what you can afford should always be step number one. In today’s housing market, a real estate agent or seller is going to want to know if you’ve been pre-approved by a mortgage lender.
But what does pre-approval really mean, and why is it so important?
With rising home prices and high buyer competition, a pre-approval letter is crucial prior to making an offer. This year especially, being intentional and competitive are musts when it comes to buying a home.
Benefits of a Pre-Approval Letter
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A pre-approval letter is the only way to know your true price range and how much money you’re able to borrow for your loan.
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It shows that you’re a qualified buyer, which gives you a huge advantage in an ultra-competitive market.
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You may be able to negotiate a better deal as the pre-approval removes a lot of uncertainty for the seller.
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Winning an offer on a property that has multiple bids as the pre-approval makes you a stronger buyer.
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Confidence and peace of mind.
2022’s Competitive Housing Market is Real – Be Prepared
If you’ve been house hunting you know that there is limited housing inventory which means there are more buyers active in the market than there are sellers. In turn, this creates some serious competition. If you’ve been searching for your dream home, we know it’s frustrating, but don’t give up!
According to the National Association of Realtors (NAR), homes today are receiving an average of 3.8 offers for sellers to consider. As a result, bidding wars are still common. Pre-approval gives you an advantage if you get into a multiple-offer scenario, and these days, it’s likely you will. When a seller knows you’re qualified to buy the home, you’re in a better position to potentially win the bidding war.
Freddie Mac explains:
“By having a pre-approval letter from your lender, you’re telling the seller that you’re a serious buyer, and you’ve been pre-approved for a mortgage by your lender for a specific dollar amount. In a true bidding war, your offer will likely get dropped if you don’t already have one.”
How Can You Gain an Advantage As a Home Buyer In Today’s Hot Housing Market?
Greenway Mortgage has expedited the approval process with its truly digital experience. With an easy online application and third-party verifications, Greenway Mortgage has significantly reduced the time and paperwork for the approval process.
So, remember what we said before? Pre-approval should be step number one when it comes to the home buying process. Before you head out to search for your dream home, click here to fill out our online pre-approval application!
In a competitive market with low inventory, a pre-approval letter is a game-changing piece of the homebuying process. Not only does being pre-approved bring clarity to your homebuying budget, but it shows sellers how serious you are about purchasing a home.
Our licensed mortgage experts are available 7 days a week to answer all your questions.
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The Fed didn't raise policy rates at this week's meeting but did signal a possible March hike. Markets are now pricing in up to 6 hikes in 2022. |
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Economic growth accelerated by more than forecast in the 4th quarter, fueled by the rebuilding of inventories and a pickup in consumer spending. |
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Fewer workers applied for unemployment benefits last week, a sign the job market continues to recover from the impact of COVID-19. |
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Case-Shiller reports home prices surged 18.8% year-over-year in November, even as the housing market entered a normally slower season. |
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New home sales jumped by 11.9% to a 9-month high in December, boosted by a severe shortage of previously owned houses on the market. |
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A total of 6.12 million previously owned homes were sold in 2021, the most since 2006, despite an acute shortage of available inventory. |
If you’re looking for an all-in-one financing solution to build your dream home, look no further. The FHA Construction Loan is one of Greenway’s Specialty One-Time Close Construction Loans.
Low inventory and rising home prices can make buying a home challenging. There’s no reason to wait for your perfect home to become available on the market. With an FHA construction loan from Greenway Mortgage, you can build the home you want—and finance it with just one application and one closing. It's that simple!
The Lowdown on the FHA One-Time Close Construction Loan…
The FHA One-Time Close Construction Loan is intended for those looking to build a new home, tear down and put a new house up, or do a major renovation on an existing home. Borrowers can use a qualified licensed builder of their choice (self-build not allowed).
The best part is that this loan allows borrowers to consolidate construction and purchase price for only one set of closing costs and fees. In addition, borrowers pay interest-only payments during the construction period.
Program Details of the FHA One-Time Close Construction Loan
- 1 time close
- Owner Occupied (1-2 units); 96.5% LTV
- Only 3.5% down required, depending on loan size*
- 680 min credit score
*Finance up to 90% of project (purchase price + cost to construct). Eligibility requirements, exclusions and other terms and conditions apply.
Benefits of the FHA One-Time Close Construction Loan Include:
- Consolidate construction & purchase price for only 1 set of closing costs & fees
- Purchase a teardown property
- If you already own an empty property & want to build a home, tear down & put up a new one, or do a major renovation on an existing home
- Pay just interest-only payments during construction
- Avoid requalification post-construction
- Simple & flexible draw process with no set schedule
- Use qualified licensed builder of your choice (self-build not allowed)
Bottom Line:
So, why wait when you can build your dream home the way you want? Who knows when low inventory is going to subside? While mortgage rates are low, take advantage of this exciting opportunity. Reach out to the experts at Greenway Mortgage to learn more or to see if you qualify for our FHA Construction Loan.
Continue reading to learn how Construction Loans work and be sure to download our free Construction Loan Guide.
How Do Construction Loans work, you might ask?
Overall Process:
- Builder Approval
- Project Approval (appraisal, plans & specs, costs from builder)
- Borrower Credit Approval
- Initial Draw at Close (up to 50K) to get a project started and/or reimburse for any materials already purchased
Construction Period
- Post close welcome call from the construction management company
- Inspections done as work is put in place, then checks for draws issued to builder and borrower
- Once work is done, the loan is modified into a standard 30-year fixed loan at present market rates (vs. the interest-only loan in place during construction). Borrowers can pay down the balance on a converted loans in the event other property they owned has been sold in the meantime. No additional closing costs when the loan converts.
Specialized Features
- Stalled projects
- Modular construction
- Major renovations (projects beyond scope of renovation programs)
Remember, Choosing an Experienced Lender is Critical
A construction loan is more complex than a standard mortgage, with more moving parts and more specialized expertise required.
Greenway Mortgage has the knowledge, experience, and proven process to guide you through the construction loan process as you build your dream home. To learn more about our construction loan program and find out if you qualify, contact us to discuss your project.
FHA Is Not the Only Construction Program We Have!
Be sure to check out our Conventional, USDA, and VA Programs Too:
