What Are The Special Mortgage Challenges for Self Employed Borrowers?

BasicsMortgage lenders classify borrowers in two different ways:
wage earners
self-employed
Wage earners are much easier to analyze for a mortgage lender. They usually can provide paystubs, employment documentation, and tax returns. Their income stream is easier for a mortgage lender to understand.A self-employed borrower is often much more difficult to understand for a mortgage lender. Challenges may include:
stability of earnings
track record in business
complex tax records
unclear assets
Stability Of EarningsThe first issue is stability of earnings. A self-employed borrower may not have constant income. Earnings will often fluctuate depending on how their business is going.Track Record In BusinessLenders usually like to see a self-employed borrower have at least a 2 years track record in their business. This usually shows the lender that the person is capable of generating income in their new self-employed work. They usually also like to see someone who is self-employed in their line of work. If you have years of experience as a carpenter but open up a coffee shop this is a major switch and a mortgage lender will have to analyze this.Complex Tax RecordsSelf-employed borrowers often have complicated tax returns. This is partly the result of a complex tax code and partly because most self-employed borrowers are thorough in using all available tax deductions.Unclear AssetsThe final issue is unclear assets. Borrower assets may be intermingled in business accounts with other business partners. Deposits in a business bank account may represent revenue but not necessarily the final income or net profit a business generates.Additional StepsMake sure that when you apply for a mortgage you clearly state that you are self-employed up front. The self-employed usually have nearly all the same loan options as wage earners.You may need to prepare your documentation in advance – such as making copies of business licenses, permits, and financial records.

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Real Estate Property Development Maximising Your Return

Land DevelopmentLand development is one of the most exciting types of real estate. However, it can also be an area that will teach you some quick and painful lessons if you jump in without knowing what you are doing.By taking some land that isn’t yet fit for building and taking it through the approval process, you can dramatically increase its value.Remember that it also makes sense to start small and work your way up with land development. Starting off small allows you to get comfortable with the land development process and before going out to raise millions of dollars.The simple ingredient that allows someone to make it big in commercial real estate is simply desire, because in the end it really boils down to how bad you want it.If you have a strong enough desire, you will find a way. You need to be familiar with the tools, techniques and guidance that help you along the way. A lot of investors don’t have a real estate license, and they often wonder if not having a license poses a problem.But not having a license will not hinder you.Investing in commercial real estate requires a handful of skills. You don’t need to understand complicated equations but some of the following skills are a must.A few skills that you should have1. Meeting people and making new friends:
Are you able to talk and connect with people easily? Do you like meeting new friends and finding out more about how they view the world? If so, you will do well at creating a stash of contacts. It is important to network with the people who will be investing in your commercial real estate deals because they hold the ‘pot of gold’. People that you meet will eventually be your advisors, investors and partners and they will send deals to you and connect you with wealth-building resources.2. Doing simple maths.
Can you look at a fax and properly enter some numbers into a simple spreadsheet? Can you use a calculator? These skills will help you determine what a commercial property is worth, what you should pay for it and what your payday will be.3. Accounting and Collecting
If you going to be in business then you need to be comfortable asking other people to pay you the money that they owe you.Real Estate, like the rest of life, does have risks. If it didn’t it probably wouldn’t be as muck fun. And it surely wouldn’t pay off with the incredibly strong rates of return that it does. Land development is a way to take a small amount of money and turn it into a fortune. If you can see the vision, stay the course, and make friends with plenty of city planners and other governmental types, you can have a new and prosperous career in land development.Land developments can a great thing, but it can also be quite challenging at times.
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