Equity Matters: Last Call for Specialized Self-Employed & Investor Solutions

Hey, all self-employed homebuyers and real estate investors … It’s Last Call!

As current inflation and interest rates continue to soar, the Federal Reserve Board is widely expected to announce later this month that it’s raising interest rates by another three-quarters (0.75) of a percent. That would be the second such increase in two months — and one and a half (1.5) percent over two months is a very, very big deal by Federal standards.

The current interest rates for a 30-year mortgage are hovering at about 6.0%, and this next hike will drive borrowing costs even higher. The expected July 27 rate hike, which is likely to be followed by more hikes as the year progresses. This will be another sign that the economy is shifting and adjusting very quickly as the Administration continues its battle against inflation.

As the recession looms before us, home prices across the nation are starting to dip, mortgage default notices are at an all-time high, and advertisements for short sales and foreclosure counseling are being advertised on your televisions. First Time Homebuyers continue to be squeezed out of the market due the immense increase in the affordability index. As the market contracts, so shall the financing options available for specialized out of the box scenarios.

So, the paramount question is… how will the upcoming rate hike and real estate market slow down affect Homeowners?

With the shutdowns of 2020, many businesses suffered drastically. Although many W2 employees are back to work, a good deal of the self-employed borrowers continued to take huge losses on their tax returns for 2021, which impacts their ability to qualify for a traditional mortgage with conventional or government financing. In response to this, the mortgage program market had expanded with new, creative programs to help these folks qualify, either with bank statement mortgage loan programs or asset depletion programs which allow for banking deposits to be considered as a source of income, in lieu of traditional tax returns. In addition to providing special consideration for self-employed borrowers, Lenders also deployed innovative financing option to assist real estate investors grow their portfolios.

Thus, in response to the changes in the current real estate climate, Lenders are beginning to retract these specialized programs to avoid risk. A slippage in home prices, also means a dwindling in home equity, so the risk to the Lender increases. Should the home equity position become “underwater” – meaning that the loan balance on the home exceeds the current home value, the Lender will suffer immense losses. To combat this, Lenders have begun to terminate the programs. Thus, time is of the essence.

Although these programs are in jeopardy, there a few solid and stable lenders, such as Paramount Residential Mortgage Group Inc, (PRMG) continuing to offer specialized options to help the self-employed and investor community.

1. No Ratio – These are loans that are qualified based on the property type and the cashflow your investment is producing. Thus, there are no traditional debt to income calculations to adhere to.

2. Debt Service Coverage Ratio (DSCR) – These loans allow an Investor to qualify for a mortgage based on cash flow generated from an investment property, as opposed to their personal income. A calculation based on potential rental income is used to offset the proposed mortgage payment and allow for very light paperwork.

3. Stated Income – These are loans that qualify based on the Buyers income profile as it is described by the Buyer. There is no income documentation, and the stated income is supported by asset statements to align with what is disclosed.

4. Bank Statement program – These are loans that qualify based on business banking deposits tracked through bank statements, instead of traditional tax returns.

Make sure you call PRMG Honolulu immediately before the programs close at (808) 427-8800! The key to navigating the changing mortgage climate is to be sure to align yourself with a knowledgeable mortgage expert that can lead you to financial success. At PRMG, our motto for 2022 is No Homeowner Left Behind, because we pride ourselves in offering traditional as well as creative financing options for those who may find themselves “outside the box”.

We have a dedicated team of Mortgage Experts to help you and we offer free consultations! Visit https://oahu494.prmgapp. com/HonoluluTeam.html today to book your appt with one of our Specialists!

Questions for Judy Meredith? “The Mortgage Professor”

Email me:

I welcome the opportunity to help You find solutions! jmeredith@prmg.net

Judy Meredith
“The Mortgage Professor”
PRMG Hawaii Area Manager
Direct: (808) 222-7903
NMLS ID: 716323

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