Interest Only Home Loan Is It Right For You?Written by Carrie Reeder
There are many benefits to interest-only mortgage loans. There are many situations where an interest-only mortgage loan could be best for you.
Here are some of situations where an interest only mortgage loan might be beneficial to you:
1. If you are in a situation where your income is sporadic and would rather have option of paying as little as possible sometimes and then paying larger amounts when there is more income, for example, a real estate agent or loan officer.
2. If you are investing your mortgage payment savings in something else that is low risk, and has a much higher return on your money than your house payment.
3. If you are temporarily in a situation where your income will be low for a while but then increase later on.
4. If your mortgage is only temporary, for example, an investor looking to flip a property or someone who is working on a fixer upper. It would be good in any situation where it would be in your best interest to keep payment low as opposed to creating equity in home.
Self Employed Mortgage Loan Getting A Mortgage When Youre Self EmployedWritten by Carrie Reeder
Being self employed has many benefits. When you are self-employed, you can write off all of your deductions on your taxes. You have potential to make more income than someone who is employed by someone else. You have freedom to be your own boss. One of few times when being self employed has some drawbacks is when you go to get financing for a home or a major purchase. But, here are some things to know that can help you make mortgage loan process run smoothly when you are self employed.
When verifying income - In general, lenders want to see at least 2 years of self employment history, sometimes they want to see 3 years. They will want to see this history verified in tax returns, usually. Sometimes lenders will figure your income as being average income you claimed on your income taxes as profit, not your gross business income. Sometimes lender will figure your income as lowest of two years and sometimes as highest of two years. Talk to your mortgage broker or lender and find out which way they verify. Sometimes lenders will figure a portion of your write-offs or deductions back into your income. There are ideas of other ways that a lender may be able to verify your income and if you are self employed it will help you to be able to show a more of your income.
A. Use bank statements as proof of income Find a lender who will accept 1-2 years of bank statements as proof of income. It is becoming more common nowadays for lenders to verify your income this way. This way usually works better in proving income than going off of your tax returns, because you can usually prove a lot more cash flow than tax returns will show. On your tax returns you usually subtract each and every business expense before you claim any profit. When using bank statements, you are still proving income, this does not put as much emphasis on your credit score or down payment as stated income or no doc loan will.