real estate finance - full book (500 pgs)

When qualifying your buyer as to the stability of

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Unformatted text preview: ncome. If the income is derived from stocks, the lender will request either copies of the stocks or a statement from the brokerage firm that is holding the stock as to the actual ownership of the stock and a summary of the stock performance for the past several years. If the income is from interest, once again the lender will ask the source of income. The lender may ask for copies of the certificates of deposit or a statement from the bank or institution holding the CDs as to ownership and the amount of interest paid. In addition to this information, the homebuyer will be asked to supply complete signed copies of his or her tax returns for the past several years. Tradepeople – Tradepeople such as carpenters and painters, are treated basically the same as commissioned salespeople. The lender determines the previous two years' income by means of W–2 forms or tax returns. Hourly rates are not used because employment may not have been regular and full time during the year. Rental income – Rental income can be counted toward the stable monthly income, but many lenders give this type of income special consideration, reviewing it very closely. On many applications, the lenders provide space for rental income to be included, but require the prospective home–buyer to provide the following information: 1. 2. The gross rental income from the property The amount of the mortgage payment on the property Dynasty School (www.dynastySchool.com) 13-9 REAL ESTATE FINANCE 3. 4. The amount of the taxes on the property A realistic set of operating expenses for the property When the information is provided, and prior to the lender approving the net operating income as part of the stable monthly income, some lenders will relate the net operating income to the type of property. Lenders consider positive cash flow, or spendable income, from real estate as income. Cash flow is gross income less mortgage payments, taxes, and operating expenses. Generally, an investment in a single– family dwelling...
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