Can I Get a VA Loan If I’m Self Employed?

Do you own a business and want to buy your own house? Wondering if you can get a VA loan if you’re self-employed?

Self-employment can pose unique challenges when purchasing a house. The income of self-employed individuals can be less consistent compared to those receiving fixed monthly salaries.

Because of the inconsistency, lenders often scrutinize the application of self-employed home buyers. Applicants are required to submit a least 2 years of income tax returns and business documents to get a VA loan.

You are considered a self-employed when you meet any of the following criteria:

  • You are the sole owner of the business
  • You own at least 25% of the business
  • You are working freelance
  • You are a contract worker

Lending policies and guidelines of VA loans for self-employed veterans are different for each lender.

Can I Get a VA Loan if I’m Self Employed?
Self Employed in the Family Business

If you are working for a family-owned business, you will not be considered as self-employed unless you own 25% of the company. This ownership should be confirmed by a third-party figure. In addition, you are required to submit tax returns for 2 years and the business should have been active for at least a year.

Self-employed individuals should also understand that lenders only consider the income which you pay in tax. Any amounts that are not documented are not counted.

Freelance Workers and VA Loans

It is possible for freelance workers to get a VA loan. With modified paperwork requirements, lenders can give you a positive feedback. Individual tax returns and all applicable income documents for 2 years should be submitted.

In self-employment, stability is only considered if the business has been operating for at least 2 years. In addition, a profit and loss statement for the current year is required if the taxes have not been filed.

Documents Required for Self-Employed Individuals

The challenge is being able to show the lender that your business is on a solid financial ground. For self-employed qualified military borrowers, heavy paperwork is required to process your VA loan.

To gauge your income trajectory, lenders will look to at the two-year income documents. This will determine if you have the ability to repay the loan. A major red flag in your application is when your income decreases each year. In most cases, the lender will require you a written explanation of the drop. If the descent is huge, your application will be declined.

Lenders need a healthy amount of information to decide to give you the loan in addition to the usual requirements listed on the VA loan application. To apply as a self-employed veteran, you need to dig up these required documents:

  • Current financial statement – this should include a year-to-date profit and loss profit
  • Two consecutive years of individual income tax returns
  • Two consecutive years of business tax returns – this is required for corporation or partnership
  • List of your partners or stockholders

Conclusion

Yes, you can get a VA loan if you’re self employed. Collecting the required documents may sound exhausting, but it is reasonable for lenders to get as much information as possible to show that your business is reliable and sustainable.

Jimmy Vercellino and his team can help you get the paperwork needed to get your loan approved, guiding you through the process. Call today and let’s get started!


How Long Does It Take to Raise Your Credit Scores?

How Long Does It Take to Raise Your Credit Scores?

Having good credit is important for many reasons. Unlike in the past when credit scores were only used to determine approval for loans, today they’re used for many other things.

Some of these include potential landlords, auto insurance rates, homeowner’s insurance rates and even potential employers. Your credit scores play an important part in determining if you’re approved for a mortgage.

Unfortunately, raising credit scores takes a lot longer than it does to lower them. Get the facts about credit scores here.

What Determines Credit Scores?

Your credit scores are determined by five different factors, each of which plays a different role.

  • Payment history – 35 percent – This means how you are about paying your bills on time both now and in the past couple years.
  • Credit utilization – 30 percent – This is the amount of your available credit you have used up in comparison to the total amount available.
  • Length of credit history – 15 percent – This is how long you have had credit accounts. The longer you have accounts, the more it helps your scores.
  • Credit mixture – 10 percent – This is the different types of credit such as credit cards, installment loans, mortgages, etc.
  • New credit – 10 percent – This is the amount of new credit that has been opened recently.

How to Improve Credit Scores

Since there are various things that have gotten your credit scores to where they are, there are also various things that need to be done to improve them. One of the most important things to do is make sure your monthly bills are paid on time each month. If you have small debts, do your best to pay them off as soon as possible because that will improve your credit utilization.

Do not open any new accounts if you’re trying to improve your scores. Do not apply for several credit cards because the hard inquiries on your credit report can also lower your credit scores.

How Long do Certain Things Stay on My Credit Report?

Many people don’t realize that negative things on a credit report can stay on and affect credit score for years. A few missed payments or an account sent to collections may be corrected quickly. However, being corrected quickly does not necessarily mean they are removed immediately from your credit report. Below are some of the causes of bad credit report scores and how long these things stay on your credit reports.

  • Accounts in collections or charged off – Stay on seven years from the date the lender reports the first missed payment. If you make payments during the seven years, it’s still going to be on your report, but it won’t have such an impact.
  • Late payments – These may be on the credit report for up to seven years from the date of the first missed payment…even if you pay the past-due amounts. For example, if a payment was missed in September 2013, it would come offer your report in September 2020.
  • Bankruptcy – Depending on the type of bankruptcy, it can remain on your credit report anywhere from seven to ten years.
  • Repossessions, foreclosures or similar negative accounts – These also remain on your credit report for up to seven years from the first late payment.

How Long Does It Take to Improve Credit Scores?

The time it takes to improve the actual credit score depends on why the score got to that point. For instance, if your score was low because of too much credit, the score will go up in a couple of months once you get some of the balances paid down. If the scores were low due to bankruptcies and collections, it can take years. Even though your credit isn’t perfect yet, your scores can go up just by continuing to pay the accounts down.

For instance, a score of 680 from late payments can go up to 780 in nine months even though it stays on your account for three to seven years. A foreclosure may stay on your report for seven years, but your score may go from 680 to 780 in three years. The important thing is to always try to make regular payments to work on the scores.


How to Dispute Credit Report Errors Systematically

How to Dispute Credit Report Errors Systematically

Did you know that your credit report could have mistakes that even you’re not aware of? According to a Federal Trade Commission study, approximately 20% of the consumers studied had errors on the report from at least one of the major reporting agencies: TransUnion, Equifax and Experian. Could you be one of these consumers? Take advantage of the free credit report the federal government entitles you to each year and find out. Here is valuable information on what to look for and how to dispute credit report errors.

What Kind of Errors Should I Look For?

While some may have more importance than others, any inaccuracies can affect your credit numbers, which can play a role in determining your creditworthiness to lenders and creditors. According to the Consumer Financial Protection Bureau, the following areas are worth double checking.

• Identity – Verify your name, address, social security number and phone number. This area is where you may find indications of identity theft or incorrect information that belongs to another individual. Names may get mixed up if they’re similar or have Jr. or Sr. after them.
• Account Status – closed accounts still showing as open; reports erroneously listed as delinquent or late; debt listed more than once but with different names and incorrect dates on when the account was opened, or payment was made.
• Data Information –same account but listed multiple times under different creditors or a correction that was not actually entered.
• Balance – incorrect credit limit or current balance.

How to Dispute Credit Report Errors

Fixing errors on your credit report is the responsibility of the creditor who sent in the information and the credit reporting agency, but it must be reported by you. You must submit a report to both the agency and the creditor listing what you believe to be incorrect as well as copies of documentation proving the information. You must include your name, address and all pertinent information.

Send the information certified mail “return receipt requested” so you know they received the news. Agencies typically correct the mistake within 30 days unless they feel change is unnecessary. Once the change is made, they’ll send you a free copy of your report, which does not count as one of your annual free reports.

Get Your Free Copy to Dispute Credit Report Errors

Checking your credit report will not only help you find mistakes but can also make you aware of possible identity theft as early as possible. The sooner you’re aware of the problem, the quicker you can get it fixed. It’s effortless to get your free copy online. You also have the choice of which agency’s report you want to view. To dispute credit report errors you simply need to fill out a simple online form and specifying which statement you want.

Conclusion

An inaccurate credit report can affect you in many ways and cost you extra money. This can result in paying more in interest than they should or being overcharged on auto loans, credit cards, insurance premiums and various other financial obligations. The best way to know your information is correct is to get your free report. If there are mistakes, dispute credit report errors as soon as possible and verify that they get corrected.


How Many VA Loans Can You Have at One Time?

How Many VA Loans Can You Have at One Time?The Department of Veterans Affairs is a government agency that helps veterans and military personnel obtain financing to buy homes by offering the Veterans Affairs VA loans. Getting this loan offers many benefits to veterans and service people.

Some benefits include low or no down payment, less strict credit score requirements, fewer fees and more. Surprisingly enough, some veterans have more than one VA loans at a time. Read on if you want to learn more about how that works.

Is it Possible to Have More than One VA Loan?

It’s very possible to have more than one VA loan at a time. A second home can be bought by using what’s referred to as a Second-Tier Entitlement. The VA gives veterans a certain dollar amount known as an entitlement. So long as the maximum entitlement is not all used up, the individual can buy a second home with another VA loan.

The borrower will still have to qualify for the second loan with the lender. If the first mortgage was used for rental property, the borrower may need to show proof of rental income for the first property as well.

What Determines Loan Amount?

The loan amount for a VA loan is determined by the entitlement, which is $36,000. The original “old” maximum loan amount was typically $144,000. Four times the amount of the entitlement. This does not mean that $144,000 is the maximum amount a veteran could borrow.

The Veterans Affairs will guarantee 25% of the amount over $144,000. Because many areas are more expensive in which to live and buy homes, the maximum amounts are higher in those areas. For instance, in the DC Metro Area, the maximum loan limits are up to $768,750. This means the 25% guarantee entitlement would be $192,187.50. Again, having more than one VA loan is possible only if the veteran hasn’t used up his or her entire entitlement.

How Many VA Loans Can You Have at One Time?

If you were to ask a person who’s currently paying one mortgage off how they felt about getting another mortgage, they might say they’d run in the opposite direction. However, there are some circumstances where a homeowner is ready and willing to get a second loan or even a third loan. One situation is if the first or second mortgage is to be used as rental property. In this case, the mortgage payment is typically paid from the rental.


Another situation might be where the first mortgage is or will be paid off or the home is being sold. The veteran would be eligible for another VA loan because he or she is getting the entitlement back. Regarding having multiple VA loans at one time, the clearest answer is that it all depends on the amount of the entitlement and the maximum loan amount available.

It’s important to remember that while it may be Veterans Affairs that guarantees the loan, it’s still the lender that provides the financing, and a lender goes by the borrower’s finances. A lender is not going to be as concerned at the number of mortgages a borrower has as much as the borrower’s ability to repay them.

If you’re a veteran who’s ready to make a purchase or one who is interested in a second veteran’s loan, contact us and speak with one of our loan specialists. At First Choice Loan Services, Inc., we have a team of specialists ready to assist you in your loan process.


How to Buy an Expensive House with a VA Jumbo Loan

How to Buy an Expensive House with a VA Jumbo LoanWith the housing market picking up the past couple of years, more individuals and couples are attempting to purchase homes. Between the different loan types and programs now available, buying a home can be easier than one would ever imagine.

Veterans who want to buy more expensive homes have the option of getting a VA Jumbo loan. Veterans Affairs loans have always been a convenient option for military personnel. Here is some information on how that can be accomplished.

What are Jumbo Loans & How are They Different?

Jumbo loans are loans that are for an amount that is higher than the conventional loan amounts, which currently are at $453,100 in most of the U.S. and $636,150 in Alaska and Hawaii. Freddie Mac and Fannie Mae purchase loans from lenders and have set maximum amounts for a loan to be considered a conventional conforming loan. Loans higher than that amount are considered Jumbo loans.

Besides the loan amount being higher, there are other ways that Jumbo loans are different.

  • Higher interest rates
  • Require high credit scores
  • Higher income required
  • Employment history for a longer period is necessary
  • Require the borrower to have enough cash to make a few months of mortgage payments
  • Down payments are 10 percent to 15 percent higher than a conventional loan.

Jumbo Loans for Veterans

The good news for veterans is that Jumbo loans are not just for certain home buyers. Many were under the mistaken belief that because veteran loans offered special benefits they could not be offered as this type of loan. This is a misconception, because veterans can also get Jumbo loans if they meet the eligibility requirements.

Another piece of good news for veterans is that they have very competitive interest rates. Whereas regular loan rates are .25 percent and .5 percent higher than conventional loans, veteran’s Jumbo loans usually are not.

How to Buy an Expensive Home with a VA Jumbo Loan

Veterans can still buy an expensive home with a Jumbo loan. However, it will take a little calculation to get correct guarantee amounts and possible down payments. The Department of Veteran Affairs guarantees 25 percent of the $453,100, so if you purchased a home for $500,000, you would be required to have a down payment of 25 percent of the amount over $453,100, which would be $11,725 ($500,000 – $453,100 = $46,900 X .25 = $11,725).

While interest rates are usually not higher for veteran Jumbo loans, they could be higher. But the amount is still substantially lower than if you would have to put down a down payment on a conventional Jumbo loan. The Veteran Affairs program makes it very affordable for military personnel to purchase a high-end, expensive home.

The Department of Veteran Affairs provides veterans with an entitlement, which is a dollar they agree to pay back for the veteran towards the purchase of a home. The basic entitlement is $36,000, but it’s much higher when all is said and done. The only situation where a veteran would have to pay a higher down payment would be if they’ve already used up some of the entitlement on a previous mortgage.


Using a VA Loan for Multi-Unit Properties

VA Loan Multi-Unit PropertiesVA loans are mortgage loans used by veterans and their family members to purchase a home. The loans are backed by the Veterans of Foreign Affairs.

VA loans are typically used to purchase a residential home for an individual or family. However, there may be other situations when a buyer uses a VA loan, for example multi-unit properties.

Purchasing Multi-Unit Properties

While the buyer cannot use a VA loan to purchase investment property like a rental unit. The veteran may use it to buy properties.

According to VA regulations, investment property is property that the home buyer does not live in as a primary residence. Therefore, in order for a VA loan to be used to purchase multi-unit properties. The buyer must occupy one of the units even if the property isn’t bringing in any income.

In addition, the qualified buyer may not buy the property, live in it for a while, move out and then later use it as rental property. The requirement of living in the property is a legal binding contract between the buyer and the VA.

Are Income Qualifications Different for VA Loans for Multi-Unit Properties?

Buyers who purchase multi-unit properties often do so with the intent of renting them to generate income.

While it’s perfectly within their right to do this, as long as they continue to occupy one of the units, they shouldn’t do so with the intent of using future income to meet the income qualifications for the VA loan. This is not to say that the income can’t necessarily be used.

However, lenders are not going to just take the buyer’s word regarding income. If the buyer intends to use the income to help satisfy the income qualifications, he or she must provide the VA or lender with documentation of the buyer’s history as a landlord.

Because lenders may vary with their requirements, the buyer is advised to speak with the lender ahead of time to learn of any requirements the bank may have.

Additional Requirements Set by VA

Agreeing to live in one of the units is not the only requirement that must be met by the potential buyer (the veteran).

To prevent and help veterans and other buyers from buying properties that are not sanitary, sound or safe, the Department of Veterans Affairs has set Minimum Property Requirements (MPR) that the property must satisfy according to an independent VA appraiser.

These include the following.  

  • Residential property – Property must be used primarily for residential living.
  • Living space – The property must give the borrower and family members enough space to live, sleep and cook comfortably.
  • Water and sanitation – The property must show proof of a working water heater and sewage system as well as clean and safe drinking water.
  • Heating system – Heating system must produce heat in the interior reaching at least 50° Fahrenheit. If wood-burning furnaces or solar systems are used as heating sources, there must also be a backup heating source.
  • Mechanical infrastructure – The electricity, water, heating/cooling system, and other mechanical systems must in good working order and indicate they will be that way in the near future.
  • Architectural infrastructure – Roofing must be in good shape and indicate it will continue to be good for a designated number of years. Attics, crawl spaces and basements must not have water damage and must provide adequate ventilation. The foundation must be leak-free and sound.
  • Property Accessibility – Property must be street-accessible by a permanent easement or a year-round driveway.
  • Pest inspection – The home must pass a pest inspection. According to VA regulations, the fee for the pest inspection is not to be paid by the buyer.

If you are interested in purchasing a multi-unit property with your VA loan benefit, your best option is to contact a VA loan specialist, who can help you through all the red tape and help make your dream a reality.


4 Types of VA Loans

4 Types of VA LoansBuying a new home can be an exciting yet stressful experience, whether it’s your first home, second or even third. When you’re taking out a mortgage loan, it can be even more complicated. Luckily for veterans and military personnel, they have VA loan available to them.

Types of VA Loans

Whether you’re making your first home purchase or refinancing your current mortgage, it’s important that veterans know the types of VA mortgage available. Here are four types: 

  1. VA Purchase Loan

The VA purchase loan is probably the most common type of VA loans. This loan allows veterans who meet the eligibility requirements to purchase a home without having to worry about having a down payment.

About the only real requirements, other than being a veteran or spouse of a veteran, are that the borrower must meet the income and credit requirements and must also use the home as his or her primary residence.

  1. Streamlined VA Refinance

The streamlined VA refinance loan, also known as Interest Rate Reduction Refinance Loan, is a mortgage loan that allows the veteran to take advantage of lower interest rates.

VA loans are very advantageous to veterans because it not only offers lower interest rates but also allows the veteran to have lower monthly payments and possibly not have to pay closing costs.

The lender may offer to pay for the closing costs in exchange for slightly higher interest rates. The buyer may choose to take the lower interest rates and include the closing costs right into the loan.

  1. VA Cash-out Refinance

The VA cash-out refinance loan is a mortgage loan that allows veterans to take advantage of lower interest rates and get cash out of the equity of their home.

The home’s equity is how much the home is worth in terms of a home appraisal. For instance, if a veteran owes $80,000 on a home that’s worth $120,000, the veteran has $40,000 in equity. The $40,000 is the amount the borrower can take out in cash.

Some lenders won’t allow borrowers to take out more than 80 percent of the home’s equity while others may allow them to cash out 100 percent. Lenders may vary in their lending policies.

Veterans interested in a cash-out refinance will have to submit a Certificate of Eligibility to the lender.

  1. VA Rate-and-Term Refinance

The VA rate-and-term refinance is a mortgage loan that gets its name based on what it does. It allows the veteran to refinance a current mortgage to either change the interest rate or the term of the mortgage.

It differs from a cash-out refinance in that the borrower cannot take any cash out of the home’s equity. The loan balance basically stays the same.

If the veteran owes $100,000 on the loan, he or she will continue to owe this amount after the refinance. The only difference will be in the interest rate and the term of the VA loans.

Often, first-time borrowers take out mortgages with long terms, like 30 years, to have lower monthly payments. After paying on the loan for a few years, the individual may be in a better place financially and want to go with a shorter term.

However, the individual may choose to stay with the 30-year mortgage and take advantage of lower monthly payments resulting from the lower interest rates.

 


What Are the Seller Concessions?

What Are Seller Concessions When Buying a Home With a VA LoanBuying a home can be a complicated transaction. What initially appears as a simple transaction may get somewhat complicated when you factor in closing costs, loan fees, and whatnot. Suddenly it appears the asking price isn’t what you originally thought.

Seller concessions can be helpful in situations such as this. Learn how this can help you when buying a home with a VA loan.

What Are Seller Concessions?

These are contributions the seller agrees to make at the closing of a mortgage loan. Buyers often don’t realize how loan fees and closing costs can add up and change the amount of the loan.

In some situations, where the closing costs are high, a buyer may have to cancel the loan because of the final price being too high.

Seller concessions can help the home buyer go through with the loan because the seller is agreeing to pay many or all the additional fees. Depending on the type of loan, there may be a cap on the amount of concessions the seller can pay for the buyer.

What Type of Fees Are Included in Seller Concessions?

The types of fees that are included in seller concessions may also vary by the type of mortgage loan. Keep in mind that there are various types of mortgage loans, including VA, Freddie Mac and Fannie Mae, USDA, FHA and conventional mortgage loans.

Closing costs typically can include transfer fees, loan processing fees, title insurance costs, appraisal fees and transfer fees, among others.

When dealing with VA loans, the seller concessions may only go towards the following:

  •                Paying the buyer’s VA funding fee
  •                Prepayment of insurance or taxes on the home
  •                Paying extra points above two percent of the loan
  •                Providing escrow funds to give buyer a temporary interest rate buy down
  •                Paying off some of borrower’s bills or credit accounts
  •                Gifts from the buyer such as appliances

Generally speaking, seller concessions do not just include the typical closing costs but often go beyond that amount. While there may be a maximum percent s a buyer can ask the seller to pay, this does not include the loan-related closing costs. The concession is like an extra bonus.

VA Loan Seller Contribution Maximum

The amount that may be included in seller concessions also varies by loan type. Each loan type has their own maximum amount.

For instance, while USDA loans and FHA loans set their max at 6 percent, conventional loans can go anywhere from 2 percent to 9 percent. Some of it may also be dictated by individual state laws as well.

In the case of VA loans, seller concessions cannot be higher than 4 percent of the loan amount. If the loan amount is $150,000, it cannot be more than $$6,000.

Keep in mind, though, that while the seller may be limited to only paying $6,000 in concessions, the seller may also pay an additional amount towards customary loan costs. This total can add up to a lot and be a real savings to the buyer.

Here is an example of how this might work. Say the buyer’s closing costs for things like loan origination fee, title insurance and appraisal come to 2% of the purchase price. The buyer agrees to pay the VA funding fee, insurance, taxes and pay off some of the buyer’s old debts. This amount totals 3% of the sales price. Although the total paid by the seller equals 5%, it’s allowed because only 2% is actually going towards the closing costs.

 


Jimmy Vercellino Ranked a 2015 Top VA Loan Originator

First Choice News:
Jimmy Vercellino Ranked Top VA Loan Originator

VA Loan Originator Jimmy VercellinoEAST BRUNSWICK, NJ (April 1, 2016) – New Jersey-based residential mortgage lender First Choice Loan Services Inc., a wholly owned subsidiary of First Choice Bank, today announced that VA Loan Originator Jimmy Vercellino has been ranked a Scotsman Guide 2015 Top Originator. Vercellino was ranked #54 in Top VA Volume with him closing 151 loans and producing almost $38 million in volume.

Scotsman Guide, the leading resource for mortgage originators, released its seventh annual Top Originators rankings on April 1. The list, which ranks the nation’s top mortgage producers, appears in Scotsman Guide‘s April 2016 residential edition, and the rankings are available online at ScotsmanGuide.com/Top2015.

Vercellino was ranked among entries from more than 2,400 mortgage professionals across the country. To be eligible for initial consideration in Scotsman Guide’s Top Originators rankings, originators must have had at least $40 million in loan volume or 100 closed home loans for the 2015 calendar year. After receiving submissions, Scotsman Guide required written verification of top entrants’ volume data from a certified public accountant, the chief financial officer at the originator’s company or a similar source.

“It is truly an honor to appear in the Scotsman Guide ranking for Top VA Volume. So many outstanding leaders in the mortgage industry have appeared on this list, so I find it humbling to be among them,” said Vercellino. “This is also very rewarding. Because those who serve our nation make so many sacrifices, I believe it is my duty to give them a personalized mortgage experience with the highest level of attention to their long term financial goals. As a Veteran myself, I consider it my calling to continue to serve our nation’s finest through offering my deep understanding of the VA loan process.”

Executive Vice President of National Production James Iley is very excited about Vercellino’s accomplishment.

“In the years that I’ve been fortunate enough to work with Jimmy, he has always demonstrated an incredible commitment to providing Veterans and their families the knowledge, resources and guidance they need to find the home financing available to them,” said Iley. “The only thing that surpasses Jimmy’s expertise in this field is his passion to serve Veterans. Because of this, it is wonderful to see him featured in this way.”

About First Choice Loan Services Inc.

Headquartered in East Brunswick, New Jersey, First Choice Loan Services Inc. is a wholly owned subsidiary of First Choice Bank. Founded in 2009, the company is licensed to originate and close residential mortgage loans nationwide, excluding Arkansas. With 15 locations across 6 states and over 500 employees, First Choice Loan Services Inc. offers FHA and VA programs, Jumbo loans, fixed and adjustable rate loans, and refinancing and renovation programs. First Choice Loan Services Inc. is an Equal Housing Lender, NMLS #210764. Licensed by the New Jersey Department of Banking and Insurance. AZ BK# 0918586. To learn more about First Choice, visit https://fcloans.com/.

About Scotsman Guide Media Inc.

Scotsman Guide Media Inc. publishes a residential edition and a commercial edition of Scotsman Guide, in addition to Scotsman Guide News, Loan Post, Scotsman Guide Community and other platforms at ScotsmanGuide.com. Each month, the magazines reach tens of thousands of subscribers nationwide. Scotsman Guide is the leading resource for mortgage originators and connects mortgage originators with wholesale and commercial lenders.

Source: https://fcloans.com/jimmy-vercellino-ranked-as-one-of-the-nations-top-loan-originators/