We just received a mortgage update from one of our trusted lenders! Will this new update make it possible for you to purchase a new home?!

Here are the details: 

1. 2021 Maximum Conforming loan limits has been raised from $510,400 up to $548,250. This is a significant jump and allows borrowers to go up in loan amount without having to get into the Jumbo arena.

2. When Covid-19 first impacted the mortgage industry, one of the first retractions of lending was credit scores below 620. As of today, we are now allowed to do 580-620 credit scores on Government loans.

3. One of the big challenges in the mortgage industry is self-employed borrowers. Pre-Covid, we would use the last two (or sometimes one) year of tax returns to calculate their income. We would also ask for a Profit and Loss statement but short of a wet paper napkin, it was the tax returns that dictated what the income was that we were going to use. Now, we look at the Profit and Loss AND we are looking at the borrower’s Business Bank Statements to ensure that the bank accounts (aka business) has revenue coming in. These deposits/income are going to be reviewed. We have been using the last 2 months Business Bank Statements. That is now being increased to the last 3 months. If the Business income is declining, we are having to use the reduced income to qualify the borrowers. It is now more important than ever to get self-employed borrowers through Underwriting as early as possible.

4. A number of people have been asking what we see happening next year in the Real Estate Market. The Economists all seem to believe that interest rates will stay low and that we should have a very good year in Real Estate. The one piece that I think is going to be a challenge is the self-employed borrower. Right now it’s just Profit and Loss statements along with bank statements. Next year, once the self-employed borrower files their tax returns, it could pose a problem. Declining income of over 20% is a real problem in the land of Fannie/Freddie and even more so in the Jumbo arena. There are questions as to what the government will do with PPP loans. The overwhelming opinion is that these loans will be forgiven. But are the recipients going to required to include that as income which would help their tax returns, but then they have to pay tax on that income?

A lot of questions out there and even more will arise as we go through the Holidays. We are here to help you through the process!

Information provided by Steve Bowmer at LeaderOne Financial. If you have any questions, please feel free to reach out to Steve and SteveBowmer@leader1.com or 360-904-1485. You can also reach out to The Tierney Real Estate Network at info@thetierneynetwork.com or 360-362-8002.