Qualifying For a Florida Home Loan Difficult Even For Business Owners
If you own 25 percent or more of a business, it is getting more difficult for you to qualify for a “conforming” Florida home loan.
Conforming loans are sold in the secondary market to government-sponsored entities such as Freddie Mac and Fannie Mae. With the curtailing of the so-called subprime lending market, conforming Florida home loans will be all that’s left - and that’s a tall order for even middle- and upper-income residents.
In Florida, the statutory maximum loan that GSEs can make for single-family homes is $417,000. To qualify, borrowers must have good credit and document that they can make the mortgage payments.
Additionally of note, low and no down payment mortgages are in the subprime category and are quickly vanishing, because real estate values have dropped and foreclosures are proliferating.
Documenting the income of self-employed borrowers is not as easy as it is for salaried employees. That is important for business owners to know, as their W-2s and tax returns do not always reflect their total income.
Consequently, a Florida mortgage lender have to dig deeper to verify income that’s harder to find. Loan originators and loan processors need additional training and willingness to collect and interpret a multitude of documents.
Previously, business owners could readily find a Florida mortgage broker or lender that was willing to accept limited or no doc loans.
Nowadays, finding a lender or broker with the skills to underwrite self-employed borrowers places an additional burden on business owners.
Here are a few suggestions:
- Ask the loan officer to explain what documents are required and how he will find income that is not apparent from W-2 forms and income tax returns.
- Confirm that a Florida mortgage provider is an approved Freddie Mac or Fannie Mae seller and servicer.
- Get references from self-employed borrowers who previously used the loan officer and confirm processing and closing processes are accomplished seamlessly.
- The mortgage business is returning to more prudent times where borrowers have to document their ability to afford the debt that they incur. Now, underwriting has become more difficult as a result.
SOURCE: Sarasota Herald-Tribune
