real estate finance - full book (500 pgs)

Selfemployed borrowers are another group that are

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Unformatted text preview: shows little or negative cash flow. A negative cash flow is regarded as a long–term debt rather than a reduction of income. When a person wishes to buy and occupy a unit in a two–, three–, or four– unit building, the question that pops up is, Does the income from the other units count? The answer will vary by lender. The typical lender will count the income after subtracting a realistic figure for expenses and vacancy factor. The DVA includes the same income except for one condition: the veteran must have enough cash reserve to be able to absorb from three to six months' payments to cover the likelihood of vacant units. The reason for this is that the DVA has found that most foreclosures on two– to four– unit buildings occur in the first year. Child support or Alimony payments – This type of income can be included in the determination of the stable monthly income if the applicant or co–applicant so wishes. Most lenders will review the payment of such monies in regard to the following items: • • • Are the payments made as a result of a court order? What is the length of time the payments have been made? How regularly have the payments been made? This is accomplished by providing copies of canceled checks or verification of bank deposits. What measures are available to demand payments if payments are missed? • 13-10 Licensing School for Appraisal, CPA, Contractors, Insurance, Real Estate, Notary, Nurse, Food Handlers, Tax and Securities 13: QUALIFYING THE BORROWER • What are the ages of the children? Are the children all young and are the payments to be made for several years or are the children near the age of consent? Under the Federal Equal Credit Opportunity Act borrowers need not reveal such income and lenders cannot ask about receipt of income from either child support or alimony. However, a lender can ask about payment of child support or alimony for long–term debt purposes. Welfare Income – This type of income may be counted by the prospective homebuyer if it is to be used...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.

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