Why You Should Be Honest on Your Mortgage Application

News Source: http://firstmortgagerates.ca

Your income is an important part of your mortgage loan application, and lenders do require specific documentation before deciding to fund you. This includes income tax returns for the past two years, or two years’ worth of corporate tax returns if you are self-employed.

The only exception to this rule is if you are refinancing using a government loan, as in this case it might not be necessary to provide any income documentation. This all seems pretty clear-cut, but an article in aol.com points out there are a few different circumstances where people may decide to omit their income from their mortgage application.

If you are a self-employed borrower then you’ll definitely need to show two years of tax returns which include corporate returns if applicable. Nowadays federal lending requirements don’t allow lenders to choose which income years to use when deciding if you qualify for a mortgage. This means if you had one poor year followed by one exceptionally good year, then they cannot simply ignore the bad year as they will need to take a 24 month average of your income. If you have not disclosed income this also might raise red flags to a lender. They are going to want to know why you are trying to hide income so it’s far better to come clean as this will enable you to get a mortgage.

All cash deposits to your bank account that aren’t part of your normal income must be included and fully documented if you intend to apply for government financing. If you have taken on an additional job in order to save more money, then you’ll need to explain where these additional funds came from. If you are applying for a conventional loan then your lender must be able to source and document any cash deposits that are more than 20% of your monthly income.

If you have a joint application for a mortgage then it’s worth considering which of you has the stronger chance of qualifying. Conventional mortgage lenders are able to take just one borrower’s financial information into account, but it is different for government loans where the debt of one borrower can negatively impact the primary borrower.

The bottom line is that mortgage lenders are looking for borrowers who are able to support mortgage payments. Most will want the mortgage payment and other debt to account for no more than 43% of your income, although occasionally this figure may go as high as 55%.

Is Real Estate The Right Business For You?

News Source: http://www.consolidatemydebts.ca/

No matter what your politics, you must be aware of the ever-growing pile of regulations that confront anyone who wants to start a new business.

I knew a smart entrepreneur who once wanted to start a small business printing pricing books for contractors using a database and laser printers.He was in a large city in a state on the east coast, and thought it would be easy to get rolling, as he only needed to rent a few hundred square feet in a building dedicated to rental offices, and use two desks, a computer, and a couple of off-the-shelf laser printers.

Starting a business can be simple or very difficult depending on the business.

In jumping through the business licensing hoops at the county level, our entrepreneur found that they wanted plans of the building and a full report of all activities of those using the office. This was in spite of the fact that this building had been housing small business offices as rentals for many years. Then because he used the words “printing books,” he was tasked to report the chemical composition of the inks he would be using in printing and their possible hazards and remediation he would be doing. He finally managed to convince them that laser printer cartridges were safe and presented no hazard. Even so, his business license fee was hundreds of dollars each year because that’s what “printing businesses” pay.

The point of this little story is that these type of hurdles, valid concerns or not, jump up in the path of just about any new business that requires lease space, warehousing, employees, personal contact, food preparation, or customer traffic. A real estate investment business can, and most do, start at the kitchen table, requires no employees, and has no customer traffic. It’s the perfect business for the sole entrepreneur wanting to do something profitable without a lot of bureaucracy, licenses, and special insurance costs in the way.

A quote attributed to Albert Einstein defined insanity as “doing the same thing over and over again and expecting different results.” Of course that’s not the clinical definition, but it certainly pegs the reason so many people who want to change their financial futures are unsuccessful. Though they want to increase their income and build a retirement nest egg, they can’t seem to get out of their current rut. They are almost always confronted early on with the question from friends and relatives: “Are you insane? You can lose a lot of money in real estate; just look at the crash in 2007!” Or “Remember when Uncle Harold lost his rear on that piece of land he bought back in 1987?”.

If they let these questions and comments into their head, they’re going to keep going to work every day, getting the same paycheck, and they’re never going to take that step toward financial security. They keep doing the same things over and over again, but they just keep hoping that the results will change at some point. If they ignore the doubt and fear and concentrate on the reasons real estate investment is almost the perfect new business, they can get out of their rut.

Real estate is flexible in terms of strategies and time and money requirements.

Learning the right way to invest in real estate, and adapting the many ways in which profits are earned, there is little risk and start-up costs are almost nothing. Whether it’s locating deals for others for a fee, wholesaling, flipping houses, or rental property investing, there will be one or more strategies perfect for just about everyone.

All I’m selling here is the idea that many people can improve your financial future, and do so without a lot of money and time invested on the front end. It’s not for everyone, but it could be for you. You won’t be jumping through bureaucratic hoops for an office space, nor will you need a real estate license. All you need is the desire and a commitment to be sane. Insanity is going out tomorrow and doing what you did today and yesterday, but expecting different financial results.