San Diego, CA (PRWEB) March 08, 2014
LoanLove.com is a borrower advice website that provides up to date and in depth information in a format that is valuable to the most experienced home owners while still being accessible to those who are just starting out with applying for their first home purchase loan. The website, which has quickly become a trusted destination for current news and expert loan advice, empowers homeowners with first class knowledge, valuable resources, and connections to top rated industry professionals. Loan Love continues to provide excellent assistance to their readers by revealing some of the things self employed individuals should expect when applying for a home loan, in a new “mortgages for entrepreneurs in 2014” guide.
Though entrepreneurs have often faced some difficulties when applying for mortgages, 2014 will prove to be an even more challenging year for self employed individuals seeking to secure a home purchase loan. Congress passed an act in 2010 called the Dodd-Frank Act which was designed to protect both borrowers and lenders by preventing underhanded loan practices that left loan borrowers in financial sinkholes. This act has finally gone into affect this year. Alongside this new act, new mortgage requirements are being pressed on loan borrowers, as the Loan Love article explains:
“The new mortgage lending rule, including guidelines to assure a borrower met standards for the necessary Qualified Mortgage (QM), went into effect Jan. 10, 2014, and is designed to keep consumers from being approved for mortgages they cannot repay. The rule raises the bar for consumers to qualify for a mortgage loan, with the requirements even more challenging for the self-employed.”
Self-employed loan borrowers have always faced paying supplementary fees due to calculating their approximate income without the benefit of being able to turn over a few year’s worth of W2s. In most cases, this will result in the self-employed individual having to rely on tax returns to show how reliable they are to repay their debts, which can be problematic in the end because the tax deductions they are eligible for when running their own business can make it seem that they are earning less than they really are.
With the new QM rules going underway, lenders must ensure that borrowers are fully able to repay their loans with new procedural steps. These QM rules are structured to protect the interests of both lenders and loan borrowers, which even allows borrowers to take legal action against their lenders if they are unable to conform to the new QM rules.
“Borrowers have to prove beyond doubt they have the ability to repay. The rules of the game are already stacked against the self-employed because of their often uncertain income. The “Ability-to-Repay” rule takes that challenge and significantly magnifies it by applying more restrictive criteria to receive a qualified mortgage” says the Loan Love article. However, while the rules are meant to protect borrowers, they do make the mortgage application process much more difficult for loan borrowers, especially the self-employed. Even with a convincing amount of capital in the bank, self-employed individuals may have their mortgage applications rejected, much to their confusion.
Loan Love reminds borrowers that most importantly, the QM rules now look at a loan borrower’s ability to repay above all else. Self-employed home loan borrowers may find 2014 a difficult year to secure a loan, since lenders are unwilling and unable to take a risk when a consistent income is not ensured. The Loan Love article elaborates more on this:
“Under the new QM rules, it’s questionable how much leeway lenders might feel they have, or how willing they might be to use it, to make decisions regarding mortgage loans for self-employed individuals. Unfortunately, the current economic and political environment would suggest lenders are not likely to go too far out of their way to qualify borrowers who have anything but a pristine financial history and easily verifiable income. Most lenders will not be willing to risk running afoul of secondary mortgage market guidelines.”
To learn more about mortgage loans for self-employed individuals in 2014, please visit LoanLove.com to view the full article.