How Self-Employed Borrowers Get Financing

David Marzinke of Movement Mortgage is here to explain a great program for self-employed borrowers.

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Self-employed borrowers take a lot of deductions on tax returns to reduce their exposure come tax time, which is right around the corner.

So, instead of using their tax returns to come up with their qualifying income, David Marzinke and the Movement Mortgage team uses their net income to determine how much home self-employed borrowers can buy. They can look at either the borrower’s business or personal bank statements, depending on how they structure things, to come up with qualifying income based on those deposits.

Self-employed borrowers can increase their purchasing power.

This increases the self-employed borrower’s purchasing power, as they’ll be able to show their full deposits and present more income. There are some limitations, however: The self-employed borrower has to have been in business for at least two years, and they need to own at least 50% of that business.

As always, call, text, or email if you have questions about this or any other real estate or lending question. We’re here to help and would love to hear from you.

Should You Use an iBuyer?

More and more homeowners are selling to iBuyers these days. Here’s what they offer and why you might want to think twice before using one.

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Selling a home? Click here for a FREE Home Price Evaluation 
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For those out there looking to sell their homes, iBuyers (or instant buyers) have become an increasingly popular option over the last few years. In fact, one particular business sold over 10,000 homes in 2018. These programs are run by companies like Zillow, Opendoor, Knock, and Offerpad.

They reach out to home sellers, ask them to fill out a home evaluation, and make a cash offer. Most of the time, the price that they offer you will be 20% less or more than your home’s actual market value.

Although you’ll take a discount on the sale price, iBuyers do offer convenience. They can get you the cash right away and let you close whenever you want. If you need to sell or move quickly, this could be a great option for you.

Another benefit is that nobody has to even come through your house or know that you're selling it. No open houses, no showings, and no nosy neighbors. If you prefer to keep your sale private, this could also be an attractive option.

iBuyers will typically ask you to make repairs after their initial offer.

The major con that you need to watch out for is the hidden fees. They can charge anywhere from 13% to 15% on commission, whereas a traditional agent will only charge you 5% to 7% with no hidden fees.

Another con is that they’ll typically ask you to make repairs. They offer the price, you sign the contract, then they find out you need repairs. Of course, they will want to reduce the offer at this point, and you may end up stuck doing them because you already signed the contract.

Finally, sellers typically aren’t represented in this type of transaction. Once you’ve signed on the dotted line, you can’t use representation. If you had an agent, they’d be able to negotiate on your behalf and in your best interest.

If you have questions about iBuyers or anything else related to real estate, feel free to give me a call or send me an email. I look forward to hearing from you soon.