Scenario 1: I have a borrower who wants to do a rate/term refinance (just refinance borrower’s balance) of his 1st mortgage in Phoenix, Arizona. The loan to value is 76%. Borrower has a 2nd mortgage and a combined loan to value of 87%.

Borrower has been self employed for 10 years. Borrower’s wife has been a homemaker for the past 10 years. They have 4 kids. She has been working for 1 month and is working 20 hours/week. Will the underwriter give them credit for the spouse’s income?

Answer: The underwriter would require that the wife be back at work 6 months before we could use her income.

Scenario 2: The purpose of the loan is to simply refinance the current balance into a low 30 year Fixed. Borrower has been self employed for 15 years in Scottsdale, AZ. The Fannie Mae approval is only asking for 1 year tax return. That is good news because the borrower’s 2009 income showed less income. The borrower’s debt to income ratio is high and is basically teeter tottering between an approval and a denied status. I need to make sure I am giving the borrower all the income I can.

Questions:

• The tax returns show a carryover loss on the Schedule D. Do we have to count that loss against the borrower?

• The borrower has vehicle depreciation on the S-Corp returns. Can I add back the depreciation of that vehicle onto his income?

• The borrower has a Credit Card that the business always pays. Can we get 12 months canceled checks to prove the company pays for it so we can exclude that debt?

Answers:

• No, we have to count the carryover loss against the borrower

• Yes, we can add back the depreciation of the vehicle onto his income

• Yes, if we get 12 months canceled checks proving that the business pays for the car from the business checking account, we will not be required to add the car payment debt to the borrower’s personal liabilities.

If you have any questions about this or if you have any questions you’d like us to answer on our podcast, you can email your questions to team@azmortgagebrothers.com or give us a call at (602) 535-2171. Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

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Thanks for listening and reading the Mortgage Brothers Show. Let us know if you have any questions you’d like us to answer on this podcast. You can email your questions to Tom@AZMortgageBrothers.com or Eddie@AZMortgageBrothers.com.

Be sure to ask us for a free quote on your next mortgage. We’ll personally work with you and help you through the whole process.

Signature Home Loans LLC does not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Signature Home Loans NMLS 1007154, NMLS #210917 and 1618695. Equal housing lender.

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