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Monday, January 26, 2015

Applying for a mortgage when self-employed

By Darren Robinson

Those who are self-employed are used to a high level of autonomy. They make their own decisions, steer the course of their businesses and don't have to work beneath a power-drunk boss. Some consider this to be the American dream. Yet there are a few disadvantages to being self-employed. One such disadvantage is the fact that the self-employed have an uphill battle when it comes to securing home loans compared to those who have steady work histories with reputable employers.

Demonstrating consistent income

The first challenge that self-employed borrowers face is that they must prove that their income is legitimate and that it hasn't significantly wavered over the past few years. This is often quite difficult for the self-employed who've endured financial troubles in this rocky economy. Even if a self-employed mortgage applicant's income has recently stabilized, his home loan will be determined according to an average of his income across the past two years as reflected on his tax returns. This is a problem if his income has decreased over this time period.

For example, if a self-employed business owner made $100,000 in 2013 and only $50,000 in 2014, his qualifying income will average out to $75,000. Some lenders will consider an applicant's income from the previous year as well as this year's profit and loss statement if provided by an accountant. Yet this is typically only on the table if the applicant's income has decreased by 20 percent or less over the course of the past year. Other lenders won't consider whether the borrower is making more money this year, even if it is in the six figure range. The onus is squarely on the mortgage seeker to find a lender who will view of his income in the most favorable light.

Stated income loans

While stated income loans were originally designed for the self-employed, they've been scaled back as too many secured home loans that they were unable to repay. These loans are making a bit of a comeback but only for mortgage applicants with extraordinary credit scores (720 on up), a significant down payment (35%) and at least 6 months worth of cash reserves to pay for monthly expenses beyond the mortgage. Stated income loans for the self-employed are available on the secondary market. They may once again be available from private lenders but self-employed borrowers will be required to prove that they can repay the loan in a timely manner and they'll probably have to pay at a higher interest rate than was required of stated income loans in the past. Finding a mortgage broker with experience in self-employed mortgages can really ease this situation for you.

The tax game

Self-employed borrowers in search of a home loan are required to fill out the Internal Revenue Service Form 4506-T. This permits mortgage lenders to view a self-employed applicant's tax transcripts. Applicants are not allowed to send tax transcripts directly to lenders. These documents must be acquired directly from the IRS. Self-employed borrowers should consider the fact that expenses reported on their taxes might hurt their chances of obtaining a mortgage. While the reporting of expenses can reduce tax liability, it also decreases net income. Net income is the figure that is utilized when determining one's income qualification for a home loan.

So if a self-employed individual claims $70,000 in income and $70,000 in expenses, there is just about no chance that he will qualify for a mortgage. He'll have an uphill battle to prove that he suffered a one-time loss or that he bought something that will boost his business for the years to come.

In the end, the self-employed who are searching for a home loan have a tough decision to make. They can claim expenses and reduce their tax bill or they can pay more in taxes and boost their chances of qualifying for a large mortgage.

Demonstrating the business's existence

Self-employed business owners must also prove that their business exists in order to be considered for a home loan. Most lenders require at least two years worth of business tax returns. Other ways to prove the existence of a business include an actual business license, client statements, a statement from an accountant or 1099 income statements.

If the self-employed applicant hasn't been in business for two years, he likely won't be eligible for a home mortgage. There are some exceptions to this standard but they only occur if the applicant can present evidence of a full year of self-employment through tax documents in addition to W2s from his previous employer. Most lenders require that the applicant's previous employer be in the same field as his own business to demonstrate that he made a financially sound decision when venturing off on his own as an entrepreneur.

The self-employed can help their cause

It is clear that the self-employed have quite a challenge in securing a home mortgage. Yet self-employed mortgage applicants can be proactive and take specific measures to better their chances of securing a home loan. For example, those who apply for the loan with a co-applicant will still need to prove their income as outlined above but they'll have an improved chance of securing the home loan with the co-applicant's income taken into consideration. It also helps to make a sizable down payment. This is especially true of those who are right on the edge of qualifying for a loan and those who are seeking a small sized loan but have a weak debt to income ratio.

About the author: This article was submitted by Darren RobinsonDarren is a top rated Barrie Mortgage Broker, whose ultimate goal is to ensure that he obtains the best mortgage strategy available that fits your life, while maintaining fast, professional and courteous personal service.

Image license: Alexander Stein/Pixabay; US-PD

Financial news: January 26, 2015

Reuters: Consumer gas price declines are near lows at current oil prices per data
CNN: Target-date funds remove money management burden, but with varying results
NYT: Income-based student loan repayment plans act as an educational subsidy
CNBC: Wildlife collisions cost motorists $8 billion a year per FHWA report
AP: Agricultural drones improve farming efficiency & potentially lower costs
Zero Hedge: Central bank inflated asset prices implicate market risk moderation
MW: Greek participation in the Euro hangs in the balance following new election results
BBC: Slow economic reform, high unemployment & low GDP growth risk EU stability
Business Insider: India's economic growth will be greater than China's in 2016
Bloomberg: Multiple indicators point to a slowing Chinese equity market

Friday, January 23, 2015

The 5 best cloud-based tools for modern businesses

By Gary Gould

1 – Sales Cloud
One of the most established cloud storage providers, Sales Cloud helps businesses achieve more leads by allowing them to monitor their marketing campaigns and automatically route leads to new sales.

Collaborate with team members and exploit social media

Sales Cloud technology includes innovative sales collaboration software, which helps businesses find the right resources and people to close deals via social media. With contact management, businesses can also get to know their customers better and utilise social media outlets to attract their target markets more efficiently.

2 – OpenCRM Business
OpenCRM prides itself on its advanced, flexible, familiar and clever approach to data software, helping businesses manage their customers without obstacles. The Business Plan enables up to 15 users to access a cloud system and provides 5GB of database storage in addition to an impressive 2TB of file storage. However, the Enterprise Plan allows up to 250 users to connect and offers a more generous 100GB of database storage.

3 – ADrive Online Storage

With ADrive Online Storage you can transfer files of up to 16GB safely with secure file transfer. Benefit from a minimum of 100GB capacity with the Business Plan and edit your documents online with innovative Zoho technology. You can also collaborate with other workers in the ADrive Cloud by enabling multi-user account access, and set storage quotas for each admin user as you wish.

4 – McAfee SaaS Email Inbound Filtering

Nobody likes receiving suspicious messages or junk e-mail, especially when they already have to contend with dozens, or even hundreds of important e-mails on a daily basis. With the McAfee SaaS Email Inbound Filtering software, you can eliminate more than 99 percent of unwanted messages and dangerous malware.

Protect your business from criminals

You can streamline your service management and benefit from more than 20 layers of e-mail filtering, which will block almost all fraudulent e-mails, helping you keep your data and your clients' data safe. McAfee also offers support 24 hours a day, 7 days a week, which means businesses can get immediate help whenever they need it in order to keep any disruption to an absolute minimum.

5 – AppShore Team 3

Access comprehensive features like campaign tracking, email marketing, invoice management, sales opportunity management and mobile integration with AppShore Team 3 software. Up to three people can access the package and integrate files to manage their projects with greater ease. Integrate files with Outlook and other important business apps, and follow up on new sales leads faster to maximise your business's growth.

Use communications technology to consolidate your business growth

Cloud communications can be very cost-effective when you know what your business requires. Once you understand how to implement the right tools, you can attract new talent to your team, market your products and services to new customers and improve your staff’s productivity. These communications can practically do the job of an employee for a fraction of the price, providing specialist resources and insight that would be considerably more costly to acquire from a person.

About the author: Gary Gould is the Co-Founder of cloud ware comparison website- Compare Cloudware. Gary has worked within the technology and communications industry for over 20 years as well as having a wealth of experience in managing businesses of sizes.

Financial news: January 23, 2015

Brookings: Quantitative easing has proven to be less inflationary than first thought
NYT: The ECB's goal for quantitative easing is increased inflation
Reuters: Airlines will save hundreds of millions of dollars due to lower oil prices
AP: United Airlines Q4 profit fell 80% due to severance packages & fuel hedging contracts
CNN: As many as 20,000 jobs could be lost in N.Dakota due to oil price declines
WS24/7: Average middle-class income fell 4.3% between 2009-2013
CNBC: It is a fact  the U.S. Dollar will strengthen against the Euro with ECB QE
Zero Hedge: ECB QE is likely to be less efficient than the U.S. Federal Reserve Bank's
Bloomberg: An economic effect of falling prices is deferred consumer & business spending
MW: Renting versus buying could cost millennials over $700,000 in their lifetime
Business Insider: CSE formulas in Excel consolidate data into one cell in spreadsheets
BBC: Oil prices could  stay low for up to 3 years per BP executive