Self Employed borrowers. What you need to know. 0
A few years ago you could get a mortgage pretty easy, even if you were self employed. It was called a “stated income”
loan. All you had to do was prove that you worked, had good credit, and you just told the lender how much you made. No tax returns, no 1099′s, just tell us what you make and we will believe you. Those days are long gone. If you are self employed and you want to get a loan to buy a home, there are some things you need to know. First you have to prove that you have been self employed for at least two years in the same line of work. You have to show, through tax returns, that you have consistently increased your income or at least held is steady. Then, you have to resist the temptation to have “a good accountant” who can use the current laws to help you write off everything and show that you make a very small income, or worse, a loss, just so that you don’t pay much in taxes. When you show a small income to the IRS, you show a small income to your lender and you may have a problem with your debt to income ratio.
Now as if that is not bad enough, there is a new wrinkle for self employed borrowers. Now the lender is required to verify that you not only filed your most recent taxes but that they have already been processed and through the IRS system. The form we use to do this is called a 4506-T. Many times self employed borrowers will be granted an extension so that they don’t have to file their taxes until later. The problem with that is that we have to submit the 4506-T to find out if you filed your taxes and if you get an extension then we can’t do that and we can’t use the income from that year. It not good enough anymore to just get a copy of your taxes stamped by the IRS, They have to be filed and fully processed in order for us to use that income. So if you are self employed and thinking about applying for a mortgage, get your 2010 taxes filed now.
Let me know if you have any questions or comments. Mark Afman
Then and Now. Everything around Daniles Park has changed. In 1925, the city was many miles to the north and all the roads were dirt, Now, suburbia is within a few hundred feet of it, they have completely changed the roads to get there and there is a private golf course down below the ridge. But at least in these pictures you can see that some of the view has not changed that much. You can click on the images to see a larger version.
Daniels Park looking west 1925
Daniles Park looking west 2011
A story of courage and dedication 0
This post has nothing to do with Real Estate or Mortgages. This is a story that seems to have been forgotten over the years even though there is huge memorial to the man at the center of it. The problem is that this memorial is on a little used dirt road in Jefferson County. County Road 96 is a road that runs from Buffalo Creek east to the convergence of the north and south forks of the Platte river. It is a road that really is used for recreation only as it follow the north fork. It no longer connects any towns or cities and I dare say that most folks in the Denver area don’t even know it is there. But that hides the fact that at one time, this was one of the most important railway roads from Denver to the gold and silver towns of the mountains. It was also a way for tourists to get up to see the sights. The South Platte Hotel was a stop for overnighters at the fork of the two rivers along with a few shops and a train station.
South Platte Hotel 2011
South Platte Hotel 1899-1937
Dome Rock is a little collection of 3 or 4 beat up cabins now but there was a time that people would travel many miles to ride the railroad up to see that huge, round chunk of granite. It had it’s own train station and a big picnic area. Many tourists would go even further up to see some of the other beautiful areas of Colorado. So where does the story of courage and dedication fit in? After one of those tourist trips into the mountains in 1898, a steam engine was pulling around 400 passengers down from Pine Grove, past Buffalo Creek and following that same road heading east toward Dome Rock and on into Denver.
This train had an engineer by the name of William “Billy” Westall and as he came around one of the many curves he could see that there was a bunch of sand and rocks across the tracks. He did all he could to slow the train down but the engine did crash and roll over and he would end up underneath part of the engine. Because he stuck with the train all the way to the crash, he was credited with saving the lives of the 400+ passengers. He later died of his wounds back in Buffalo Creek but he is said to have told his friend as he died “Tell my wife I died thinking of her”. A year later, a rather large crowd of friends, fellow train company employees, and crash survivors went up to the place of the crash which was just west of Dome Rock. A huge, engraved granite memorial was dedicated and placed on a pedestal so that his bravery would not be forgotten.
Crash site and memorial 2011
Only known photo of the Billy Westall crash site 1898
The problem is that cars would replace railroads and highways would be built along other corridors and eventually the Platte Canyon would no longer be used to transporting anything except the occasional fisherman and those who own a few cabins along the river. Eventually the memorial became an afterthought and and few knew what it stood there for. There is a great article about the memorial at http://historicjeffco.org/98westall.pdf
The beauty of the sales transaction, plus another Then and Now. 0
You need something and someone else has that something and that someone wants something in return (that you have) for providing what you need. So you enter into a transaction to exchange the one thing for the other. It can get more complicated then that but that is the core of how an economy works. To me the question is this. Is the transaction a battle where there is a winner and a loser or do both parties walk away happy because they worked together to come to satisfactory conclusion? An old real estate agent once told me that anytime two parties are trying to get a transaction done “one is selling and the other is being sold…just make sure that you are doing the selling.” I could not disagree more. The sales transaction does not have to be an adversarial one but rather a cooperative effort to get both parties what they need or want. I do understand that the buyer has to “beware” and many times the seller is doing the “selling” and the buyer is getting a bad deal. But I do firmly believe that if a buyer does some research and a little due diligence, they can find someone that will work with them to get them what they want or need and still come away with a fair profit for themselves. Ask for referrals from someone you trust. Ask for references from the party you are thinking of working with. Do some internet research on that person or company that you are thinking of using for a product or service. Even after doing all that, at some point you will have to have some trust in that person or company.
When I meet with a potential client, they usually sit on one side of the deak and I sit on the other side. It would be nice if the image of that relationship were one where we are all on the same side of the desk working together to get to a closing. It would be a little crowded with my desk but still image is what I’m shooting for here. I don’t have any problem with a buyer asking questions about my rates, costs, or how I do things. In fact, I encourage that. I want the borrower to be comfortable with me and the loan that I am providing. But when it gets to the point where I am thought of as the enemy or, worse, my integrity is being questioned, then either I have not done my job or that borrower needs to find another lender.
Your whole life is filled with transactions, don’t make all of them a battle. There is no way you can do that and live a happy life.
I welcome your comments and, as always, feel free to contact me if I can answer any questions or help you with a home loan.
Then and Now: The Denver Natural History Museum or The Denver Museum of Nature and Science…depending on how long you have lived here.
The Denver Natural History Museum was built in 1900 at the east end of City Park with an incredible view of the skyline. At the time it was near the very eastern boundary of the city. Now, the Museum of Nature and Science is housed in a building that wraps around the original. This “then” photo was taken in 1917 showing the original building and the granite sculptured entrance that is still there today but the museum takes up a lot more space. I can remember going there as a little boy marveling at the skeletons of dinosaurs and whales and seeing the dioramas of life as it once was.
Click on the photo for a larger version.