IRS Refund - Tax Deductions that can hurt your mortgage approval - Form 2106

Be wary of the BIG Refund...

 

Before you begin your year-end tax preparation for your 2013

 

Personal & Corporate Tax filings: Details you, and your tax preparer, should take note of: 

If you are in the market to purchase or refinance a home, BE CAREFUL not to take "extra" deductions especially on the 2106 Form - I see this a lot, and any portion of these expenses, less the allowable noted business mileage use of your car or depreciation*, will be deducted from the allowable usable income when qualifying for a mortgage. It may be great to save on taxes, but it just may STOP you from qualifying for a new mortgage, whether purchasing or refinancing. For instance, if you show $12,000.00 of expenses on the 2106 form and non of these expenses can be added back into your income,* then you have just lost $1000 a month in qualifying income. For example: If you qualified for a $2500 monthly mortgage payment before the 2106 form was considered, you now may only qualify for a $2068 monthly mortgage payment.

Here is the FHA underwriting guideline Re: (Salary, Wage and Other Forms of Income, ref 4155.1 4.D.2.l)

Automobile Allowances and Expense Account Payments

*Only the amount by which the borrower’s automobile allowance or expense

account payments exceed actual expenditures may be considered income. 

To establish the amount to add to gross income, the borrower must provide

IRS Form 2106, Employee Business Expenses, for the previous two years,

and employer verification that the payments will continue.

*If the borrower uses the standard per-mile rate in calculating automobile

expenses, as opposed to the actual cost method, the portion that the IRS considers depreciation may be added back to income.

Expenses that must be treated as recurring debt include the borrower’s monthly car payment, and

any loss resulting from the calculation of the difference between the actual expenditures and the expense account allowance.

To find out how income is analyzed by mortgage underwriters, email me for a Free Income Analysis form at hcraig@homelending4u.com   

 

 



The Grinch that Stole your Good Interest Rate

Sure "10% Instant Savings NOW" sounds Great, but not if it drops your credit score...

Hard Inquiries Hurt Your Credit Score
While hard inquiries are necessary for certain financial actions, hard inquiries should be minimized as much as possible. Your credit score is penalized for multiple hard inquiries to discourage consumers from getting into too much debt at one time. Applying for too much credit may indicate that you are desperate for credit, or that you aren't able to qualify for credit. While one hard inquiry will "steal" a few points off your credit score, multiple hard inquiries in a short amount of time can cause significant damage to your score.

Keep your hard inquiries to one or two a year. Data shows that on average, consumers with lower numbers of hard credit inquiries have higher credit scores, which could save you much more than the temporary 10% for a small purchase, in comparison.

...“Then the Grinch thought of something he hadn't before! What if Christmas, he thought, doesn't come from a store. What if Christmas...perhaps...means a little bit more!”
― Dr. Seuss, How the Grinch Stole Christmas    

Pumpkin Seeds are not just good for your health...

Build Wealth...Planting "Pumpkin" Seeds Strategically

Pumpkin seeds boost can boost your health, as a great source of magnesium and zinc, as well as omega-3 fatty acids.

Planting healthy seeds, in the ideal environment can also give your income a boost!

Plant the right seeds: Don’t waste time doing a bunch of different things just to please your customers. Instead, identify the thing you do better than anyone else and focus all of your attention, money, and time on figuring out how to grow your company doing it.

• Weed out the losers: In a pumpkin patch small, rotten pumpkins stunt the growth of the robust, healthy ones. The same is true of customers. Figure out which customers add the most value and provide the best opportunities for sustained growth. Then ditch the worst of the worst.

Nurture the winners: Once you figure out who your best customers are, blow their minds with care. Discover their unfulfilled needs, innovate to make their wishes come true, and over deliver on every single promise.

Reference:         
The Pumpkin Plan: A Simple Strategy to Grow a Remarkable Business in Any Field by
Mike Michalowicz - Author



                                                                                   

MCC Is it Right for Me?

MCC - Mortgage Credit Certificate for first time homebuyer(s)

The MCC can be a great tool to assist in generating more buying power for you as a homebuyer and /or as a Realtor helping your customers purchase a home they may not qualify for otherwise.

 

First-time Homebuyer Requirement - The Applicant who will become an MCC holder cannot have had an Ownership interest in a Principal Residence at any time during the preceding three years ending on the date on which the loan is executed.

 

Income Limits for non-targeted areas:

Families 1 or 2 Persons	$ 85,920
Families 3 or More Persons	$ 100,240

 

  

As long as you are not pushing the income limitations and you plan on staying in your home for 9 years, you will most likely avoid any recapture tax of the monies you saved.

 

The Home buyer Benefit

The MCC will reduce the amount of income taxes due to the federal government; however, the tax benefit cannot exceed the amount of federal taxes owed for the year after other credit and deductions have been taken. Instead, the tax credits can be carried forward three years until used.

Typically you can increase your buying power by an additional $166 per month. This could equate up to an additional $30,000.00 in a purchase price, depending on the mortgage program and your credit and income qualifications, which are subject to approval and the current market rates.

To see if MCC is right for you; email me at hcraig@homelending4u.com

Breaking Bad... Banks Reject More Loans, however it's not the end of the road for some...

Feel like you've hit a brick wall? A home loan refused by a bank might be approved by a Mortgage Lender  - Get more information from your local expert  Heather Craig, and break through the banks with a Portfolio Mortgage Loan Option.

 
Article By Anna Maria Andriotis - Dow Jones

 

The likelihood that a mortgage application will be approved varies widely by bank.

Home-buyer rejection rates ranged from 11% to 34% in 2012 at the 10 largest mortgage lenders, according to data released this month by the Federal Financial Institutions Examination Council. Those who applied for a mortgage at SunTrust /quotes/zigman/242272/quotes/nls/sti STI +0.77%   faced the lowest rejection rate—3,831 out of 34,749 applications were denied—while those at Chase encountered the highest rejection rate, with 26,894 out of 80,036 (a third) not passing muster. Despite the fact that large lenders sell most of their mortgages to government agencies, many require applicants to clear hurdles that surpass federal guidelines, and they do so in degrees that vary by institution, resulting in confusion for applicants. Home buyers who get rejected for a mortgage at one large bank could get approved at its competitor—assuming they know not to give up the search. “It absolutely makes a difference where you go,” says Stu Feldstein, president at SMR Research, a mortgage-research firm.

Don’t bank on getting that mortgage approved:

 

Number of 2012 home buyers rejected by the top 10 mortgage lenders

Total applications for purchase	Rejection rate	Applications denied
Bank of America*	76,355	25.6%	19,547
Branch Banking and Trust Co.	43,840	15.6%	6,855
Citibank*	44,945	14.3%	6,442
Flagstar Bank	52,030	13.2%	6,853
JPMorgan Chase	80,036	33.6%	26,894
PHH Mortgage	17,034	11.5%	1,967
Quicken Loans*	25,038	17.3%	4,331
SunTrust Mortgage	34,749	11.0%	3,831
U.S. Bank *	52,425	17.2%	9,014
Wells Fargo*	399,911	21.2%	84,687

Homestead Exemption Deadline September 18th for Broward County Owner Occupied Residential Property

www.BCPA.net File Online: https://bcpasecure.net/onlinehomestead/web/index.aspx File In Person: BCPA Special Saturday Working Hours Our office will be open from 8:30 am to 5:00 pm this summer on two Saturdays -- September 7 and September 14 -- to better serve working families.   YOU CAN FILE NOW FOR A 2013 HOMESTEAD EXEMPTION! You can file today for 2013 exemptions. This includes homestead, disability, widow/widower, granny flat, portability, deployed military and non-profit exemptions. If you miss the March 1, 2013, deadline to timely file to any exemptions, Florida law allows you to "late file" for 2013 exemptions until September 18, 2013. Note: Per Section 196.011(8), Florida Statutes, we cannot accept any exemption late applications once "late filing" deadline closes. To apply for a 2013 homestead, simply click here to use our online Homestead Application system. To apply for other exemptions, visit our Download Forms page to find the appropriate application. Questions? Please contact our Customer Service & Exemptions Division at 954.357.6830. Note: Due to a quirk in state law, pre-filing before January 1, 2013, is not permitted for the low-income senior exemption.

Key Contact Info: Email Us, Call Us, Visit Us. Location: Our MAIN OFFICE is located the Broward Governmental Center at 115 South Andrews Avenue, Room 111, in downtown Fort Lauderdale (just south of Broward Boulevard). Note: Please also see our Outreach Calendar for events held monthly throughout Broward County. Hours: We are open weekdays from 7 am until 6 pm. Important Phone Numbers: Here is a quick phone list to guide you in the right direction... Customer Service, Exemptions & General Info - 954.357.6830 You are entitled to a Homestead Exemption if, as of January 1st, you have made the property your permanent home or the permanent home of a person who is legally or naturally dependent on you. By law, January 1 of each year is the date on which permanent residence is determined.

The FHA "Back To Work" Program Is Official

Effective August 15^th 2013

Loans failing to meet FHA mortgage guidelines do not get insured, and the Federal Housing Administration has been steadily tightening its requirements since last decade's housing downturn.

On August 15, 2013, the Federal Housing Administration moved to relax its guidelines for borrowers who "experienced periods of financial difficulty due to extenuating circumstances".

AKA the "Back To Work - Extenuating Circumstances Program", the FHA removed the standard waiting periods that typically followed a derogatory credit event.*

If you've experienced any of the following financial difficulties, you may be program-eligible :

• Short sales
• Deed-in-lieu
• Foreclosure
• Chapter 7 bankruptcy
• Chapter 13 bankruptcy
• Loan modification
• Forbearance agreements

FHA understands that, sometimes, credit issues may be beyond your control, and that credit histories don't always reflect a person's true ability or willingness to pay on a mortgage.

Find out if the FHA's Back to Work - Extenuating Circumstances program applies to you.

What are the minimum eligibility requirements of the FHA Back To Work program?

In order to qualify, you must meet several minimum eligibility standards. The first is that you must have experienced an "economic event" (e.g.; pre-foreclosure sale, short sale, deed-in-lieu, foreclosure, Chapter 7 bankruptcy, Chapter 13 bankruptcy, loan modification, forbearance agreement). The second is that you must demonstrate a full recovery from the event. And, third, you must agree to complete housing counseling prior to closing. You must also show that your household income declined by 20% or more for a period of at least 6 months, which coincided with the above "economic event".

How do I document a 20% loss of household income for the FHA?

In order to document a 20% loss of household income, you must present federal tax returns or W-2s, or a written Verification of Employment evidencing prior income. For loss of income based on seasonal or part-time employment, two years of seasonal or part-time employment in the same field must be verified and documented as well. Income after the onset of the economic event, which should represent a loss of at least 20% for at least six months, should be verified according to standard FHA guidelines. This may include W-2s, pay stubs, unemployment income receipts, or other. Your lender will help you determine the best method of verification.

*Standard Wait Periods without the “Back To Work” Exception are:

Chapter 7

•  FHA- 2 Years 
•  VA- 2 Years  
•  Conventional- FNMA and FHLMC 4 years

Foreclosure – Check Date of the Certificate of Transfer

·     FHA- 3 Years

·     VA- 2 Years

·     Conventional- FNMA and FHLMC 7 years

 

For more information email hcraig@homelending4u.com

 

 

1031 Exchange

 

A 1031 Exchange—Tax Deferred or Like Property Exchange—is an exchange of real property in which no taxable gain or loss is recognized at the time of sale. Section 1031 of the Internal Revenue Code allows investors to defer the payment of state and federal capital gains taxes by exchanging one investment property with another, rather than selling it. Ask me about our 1031 exchange mortgage program up to 85% Loan to Value.

Always verify your exchange deadlines with your tax advisor.
Notice: The actual deadline for completing an exchange is the earlier of either 180 days from the date on which the Exchanger transfers the relinquished property, or the due date, including extensions filed by the Exchanger, for the Exchanger's tax return for the year of the transfer of the relinquished property. Consult your tax advisor regarding your tax filing requirement dates.