August 25, 2022

I hope you are having a great week so far, and I hope you are doing well.

Now is a great time to reach out to your self-employed clients looking to buy next year. Many of them are on tax extensions, and their taxes must be filed before October 15. Now is a good opportunity to reach out and ensure your clients get their income to the level they need to qualify for a mortgage this year. Quite a few programs qualify based on one year of tax returns. I know that self-employed people don’t like to show income on their returns, but I also know that rates on a conventional loan using tax returns are 1.5% lower than bank statements.

So let’s say you have to show $175,000.00 in income to qualify for a loan on a $1,000,000.00 property with 20% down. What does that cost you, and what is the breakeven point of showing income vs. not showing income? The cost upfront will be about $60,000 in taxes, and the rate savings of 1.5% will save you about $12,000.00 per year. So the simple breakeven is five years. If I showed $80,000.00 in income, I would pay about $22,000.00 in taxes. So, showing the extra $95,000 is costing $38,000 in taxes. So the breakeven is just over three years. The other cool part is these taxes are good for a full year until they file next October again, so when / if rates fall, they can refinance using the same returns and close before October 15 next year.

Interest rates have struggled the past two weeks, but today has been different. Rates have dropped a bit today but are still up about 1% in the past month.

• 30-year Government Loans (FHA / VA) are in the mid to high 4’s.
• Conventional Loans up to $647,200.00 - low 5’s.
• High Balance Loans $647,201.00-$ 970,800.00 are in the low to mid 5’s
• Jumbo loans above $970,801 are in the high low, to mid 5’s
• 5/1, 7/1, 10/1 Arms are in the low 4’s to low 5’s for over $647,201. Under that, don’t bother right now!
• Bank statement loans - They are available with 10% down again! 6’s + depending on down and credit score.
• Stated income loans – I have one bank with 30% down, but everything else has to be perfect! Interest rates are in the high 6’s.
• 0 down loans are in the 5’s – 620 credit score min right now! Mid 6’s, for the most part, up to $670,000.00.
• 0 down Jumbo to $975,000.00 – 680 credit score – call for a quote
• Private Money lenders - hard Money Loans – 35% down!
• No Ratio Loans 30% down
• Debt Service Coverage loans with as little as 25% down
• Bridge Loans - are typically 6.99% with limited fees – But they get you where you need to go!

Interest rates are subject to change without notice! Above are LA County Loan Limits.

I will be around all weekend if you have any questions or if someone interested in buying a property! My cell is 661-714-6258, and my office line is 661-260-2970 xt. 2222. Please text me at 661-714-6258 or email me at Mike@AugustaFinancial.com. Have a great day and a better tomorrow! Please call me when you have a client that needs to borrow!

Sincerely,