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Show Page 6 Home Magazine, THE DAILY HERALD, Friday, September 20, 19 hm.programs So, what's the big deal about being self employed and trying to get a mortgage loan? That's a common question for anyone who has never attempted to do so, but understood by those who have. The fact is, there are a slightly different set of guidelines for underwriting and approval of a self employed borrower. Many self employed borrowers may not even be aware of this difference, but many others have run into obstacles as a result First of all, let's define self employed. For the purpose obtaining a mortgage loan, all of the following forms of employment are underwritten under similar guidelines in discussion: Sole proprietor business owners Borrowers who own more than 25 percent of a Partnership or Corporation Borrowers paid in whole or part based on commission Most contractors, builders, or salespeople. Okay, now that we. have the definition, what are the guidelines for loan approval? A self employed borrower will underwritten for (reviewed approval) based on a 2 year history of earnings, as stated on their his or her federal tax returns. For instance, any self employed borrower applying for a ' mortgage loan mis year, will be required to submit tax returns for 1994 and 1995, and a year to date profit and loss, or earnings summary for 1996. The income is then determined by averaging the adjusted gross income from the tax returns. The YTD from 1996 is to of Financing A Home demonstrate that the earnings have not decreased. The adjusted gross income is the amount left over after deducting business expenses on schedule C, or schedule E, whichever might apply to borrowers who do not receive a W2. Most W2 borrowers will not fall into the category of self employed, as they are generally paid on an hourly, base or salary wage. However, those who do receive a W2 but also fall under one of the categories listed above, such as commissioned salespersons, employees or 25 percent owners of French doors prove easy installation Orlando Sentinel Q. I bought the piano I've always wanted and put it in the living room. But it's impossible to concentrate on playing it with the television constantly blaring from the nearby family room. There is an arched entry leading out to the living room. Would it be possible to install French doors in that opening? A. Yes. In fact, it can be quite an easy installation. The height and width of the archway will determine what needs to be done. If it is a tall archway, you can install French doors with an arched transom. You also can install sidelights fixed panels with glass panes on either side of the French doors. Depending on the opening, any combination of fixed and working doors and sidelights is possible. If it is a two-- or 2 archway, you 12-sto- ry should consider fixed French doors above the floor-levFrench doors, el a business, will be underwritten by using their 2 year W2 income average, less any unreimbursed business expenses written off on schedule A of the federal return. The allowable deductions from schedule A include auto expenses for depreciation, mileage, repairs, etc., as well as any number of other business expenses that might be deducted. However, since depreciation for a home, automobile or other property is not literally an actual expense, these deductions are not taken from the income. What this means to a self is that borrower employed although they might earn $50,000 a year income, the allowable income to be used in qualifying for a mortgage loan might be a great deal less after reviewing the tax returns. In short, the reason behind this method is that as a business owner or commissioned employee, your gross income may not represent your actual income if you have expenses incurred for your job. For example, if I was a sole proprietor of a company that sold tractors, I might a have gross income from total sales of $700,000 for the year. But if those tractors cost me $550,000 in the first place, my income is of course $150,000. If I also had a sales rep that I paid $30,000 for the year, in Regarding size, standard heights Mtim-UuWIHI-MI- ! T T L 785-555- 798-390- Y .in 1 Spanish Fork 0 "i i' 'J. tiii 3 Attractive 4 level bdrmi & 2 bths. Fun finished family room and double bf vioarage, fnjo the sardenfc and Jha spect-nssit rf fc8 rttfurtains and 90V cotam 1C2 L-- J square feet with loads of additional space to grow. Asking $134,500 cat. Taylor. Homes Realty about this 1 Of and otty imtiM homes, Spanish Fork split-inclu- 7S5-555- 7S3-3S- . ;- - - Spanish Fork This one has It si!. Fu3 brick 3 bedroom, 2 M baths inducing garden Ufi? rtth Jo Air p!ae new tSvt ratified csSio. Lsrp U in t neiorhood. Compare end save at $154,800 Cafl today Taylor Hoaet Realty ra-Eflj- TSSSSBI 6 Sojdie MIIIH-ZTT- Mark Greer is one of the owners of Atherton Mortgage. Loan questions or column suggestions are welcome by contacting him at his office in Jamestown Square, Prow - or by calling Mark at 'jr transom. Light switches, receptacles, telephone jacks or cable outlets that are next to the archway also might need to be moved. The French doors and trim can be stained or finished in a natural look, or they can be painted, but it is not necessary to paint them to match the other doors in the house. Nicely done French doors stand alone as a design feature, much as a fireplace doe& . Braadi Broker A 1 alterations may be required to accommodate the width of the French doors and the arch of the LaDmun Ray . However, the typical self employed or sales person might costs of have some doing business. Suppose you receive a W2, but since you work in sales, and travel throughout the county or state, you may write off your mileage or food. You are allowed these deductions since some jobs have a certain cost involved in fulfilling your duties. Your loan will be based on those same numbers, since you are telling the IRS that your true income is less, due to the costs involved in your job. If the idea of determining your usable income for qualifying for a mortgage sounds difficult, its not. With just a minute or two to review your tax returns a competent loan officer can produce the correct numbers. As I stated earlier, most self employed borrowers are not affected by these guidelines, as their deductions are non existent or very low. However, if you find that you indeed deduct just about everything, or at least enough to reduce your income to a level that does not allow you to qualify for a E es, 2 feet 8 inches, 2 feet 10 inches and 3 feet but French doors can be custom made to any size necessary. Some light framing and drywall Mi. with rood (row. arw carpel, wood Move in Ne(lrfeicfyhcTO-3b)rrl25bth.- '' nmuy roora, Mnnt putty timaocd ys,wu on mam, 2 bdnar 1 Mi own, 2 fneplaoet, 2 leva-dr- y SHI.m hookupt, faic yd Price reduced be. fear not! There mortgage loan are special loans set up for just such a situation. These programs are commonly referred to as no income qualifier, or no income verifier loans. As the name implies, your income is . not verified for these loans. If you have good credit, and at least 20 percent down payment then your adjusted gross income may not matter. The interest rates on these loans are only slightly higher, and very competitive to a standard mortgage loan. The approval process for these loans does not take any longer that any other program, and in fact is generally quicker as there is less information to verify. There are always exceptions to the rule. If your 2 year average is low, but your last year's income shows sufficient earnings, you may still qualify for a standard program. So if you find yourself in the category of self employed, there is generally a program to accommodate you. . TA1LR WOMF.S Lindon for French doors are 6 feet 8 inches, 7 feet and 8 feet Standard widths of the individual panels are 1 foot 6 inches, 2 feet 4 inches, 2 feet 6 inch- . Mi "tuli IliiMtn in bnauculilc home kt Monti - abdmu.l bch 1 in H iiiiiii 2 trim I Mmmainind2bdnn I Mi down, beautiful rock firaolKein Win tm.jmili fleoc- -, Approved for 8 mxkva 0 J450 per quarter Ljundry laundry; deck off kitchen, folly no iriihaWaJwofti in twth unm, nxx lot nfenccd yd will pay for iuclf. Maker, easy to beat, hat built tn nie, 2 car garage, walkout both, nicely landscaped wspnnkler iyi-- . Price rrdaccd on dartinf atarler borne 3 bdrm I ton on .26 acrea. Priced below appraisal. . addition to office overhead etc., these figures are also costs of doing business, and not my true income. This example is used since it is obvious and clear to most that this is the way it should 20 South State capped by an arched transom. S&:tettuty fan, IS!)) feB1 fitue J l.MF pmA rnom r Mama, ft fct mm tutor hm-i- y vaults Leec&J tn wontfwrtul tn Ir !,',' t, cr I. '.Cf T. 1.1 |