How to Get a Mortgage Post-COVID After Employment Changes
Let Amber Garofalo at CrossCountry Mortgage help you navigate with an exciting offering of new expanded products!
One of the more significant changes that came out of COVID that we are seeing in the mortgage marketplace is that so many clients have moved from a standard job to self-employed type of work (i.e. contactless delivery drivers for Uber, Instacart, etc). These type of workers now get a 1099 statement versus the W2 from the employer.
Why does that matter?
It matters because now the worker is considered self-employed. In the past, they may have been use to the employers taking out the taxes and deductions. Now, the worker must keep track of that on their own. Essentially, lenders need then treat the client as a self-employed borrower.
There's been changes in the last year and a half for these self-employed borrowers through Fannie Mae and Freddie Mac. There are now extra restrictions as far as how they're being documented for liquidity tests and the analysis of current year trends compared prior years used analyzed for a stable income.
What’s a solution?
CrossCountry Mortgage has developed some great programs to help clients because this is now a large trend of people changing from traditional work models to self-employed. This trend is anticipated to continue to rise in the numbers of self-employed borrowers.
CrossCountry Mortgage has created and been proactive in these situations and come up with some great programs for clients using 1099s to qualify clients. We also have other programs where we can use other documentation such as bank statements to qualify the client. For example, if the client is a successful self-employed business owner over the last couple years, this could be a great product for them, because traditionally we have to use two years of tax returns to qualify for the income.
Considerations for large portfolios and investors…
In addition, we have some great programs for clients that have large asset portfolios where we can utilize a bank statement program to help get them qualified. There are also products for investors looking at purchasing investment properties. These programs have been tightened a bit by Fannie Mae and Freddie Mac, so we may not see as many of them as we have in years prior. To assist with this, CrossCountry Mortgage has come out with an investor cash flow program. We can basically use the rental income to qualify the client with an acceptable/significant down payment.
As you can see, there are some unique products that are coming into play! All these unique programs have all their own rules and limitations. All credit requirements will apply and be subject to final underwriting.
Opportunities created post-COVID
As devastating as it was, COVID has created some opportunities and forced people to look outside of the box, as well. Some of these other market segments were people that are entrepreneurs looking to take a leap into business. According to a University of Maryland Economist, the highest annual total record of new business filings were filed in 2020! That is just new LLC’s and new partnerships. This points to a trend that's not going to go away and will likely become more prevalent.
Proud of the CrossCountry Mortgage Products
I'm very proud to be working at CrossCountry Mortgage, just being able to offer these products proactively in the market to fill the needs of consumers in these changing times where the standard job isn't going somewhere working an eight-hour shift anymore. It's become a little bit different, and because of that, we have some great products to help those clients.
If you have transitioned due to COVID due to an opportunity and an entrepreneurial, now being self-employed and having trouble getting qualified, you’ll want to give us a call today so we can explore if these products will help you be able to buy a home and/or invest in real estate, buy investment property, or second homes. We're happy to help see what we can make work for you and your family! Give The Amber G Team/Amber Garofalo at CrossCountry Mortgage a call at 651-300-9411 or apply here.
All information provided in this publication is for informational and educational purposes only, and in no way is any of the content contained herein to be construed as financial, investment, or legal advice or instruction. CrossCountry Mortgage, LLC (“CrossCountry”) does not guarantee the quality, accuracy, completeness or timelines of the information in this publication. While efforts are made to verify the information provided, the information should not be assumed to be error free. Some information in the publication may have been provided by third parties and has not necessarily been verified by CrossCountry.