Archives for 2011

If Your Buyer Wants More Home….Try This

6 ways buyers can boost qualifying income

Borrowers without the income required to qualify for the mortgage they need have many possible options. “Income adequacy” is governed by general guidelines that can be adjusted to meet individual circumstances. It is “softer” than the down payment requirement, discussed last week.

Maximum debt-to-income ratio

The measure of income adequacy most often used is the sum of the monthly payment on the new mortgage, plus property taxes, homeowners insurance and other debt payments, divided by income. The maximum ranges from 40 percent to 43 percent, but underwriters have discretion to accept higher requirements if they believe that circumstances justify them.

Debt payments are those that extend beyond the next six months and are not deferred for a year or longer. This includes HELOCs and other revolving credits, credit card debt that you don’t pay off at month-end, student loans, and alimony and child support payments.

Repairing inadequate income

The obvious way to repair inadequate income is to earn more, but there are also ways to make your existing income count for more. One way is to convince the underwriter that you can safely devote a larger proportion of your income to housing expense than is typical for someone in your income bracket. The best (perhaps the only) way to do that is to document that you have done it in the past — either as a past homeowner or as a renter.

Another repair could be to induce the underwriter to count income that would ordinarily be disregarded because of a presumption that it won’t continue. You rebut that presumption by presenting evidence to the contrary. Such evidence could be historical data showing that the income has in fact been generated over a considerable period. Or the evidence could be forward-looking testimony by someone in position to have knowledge of your prospects, such as your employer. Here are some examples:

  • If your income has recently increased, obtain a written statement from your employer explaining the reason for the increase and that it is likely to continue.
  • If your income has recently decreased, obtain a written statement from your employer explaining the reason for the decrease and why it is likely to be temporary.
  • If you want overtime, commission bonus and/or part-time income to be counted, document that you have received it for two years, along with a statement from your employer that it probably will continue.
  • If you are in the military and want to claim pay above base pay for your rank (jump, hazard, special assignment, etc.), and/or housing, base and food allowances, provide an explanation of why they will continue. If you are deployed, explain in writing that your pay stubs do not match your W-2s because you have been deployed to a war zone and that your income is not taxed.
  • If you have investment income from an unusual source that you believe to be stable, put your reasons in writing along with data on investment performance.

Borrowers qualifying with business income are subject to much more complicated rules that require a separate column.

Using the income of others near and dear

Co-signers: A co-signer assumes responsibility for payment of a debt in the event that the borrower doesn’t pay. However, co-signing on a mortgage is severely restricted, with the result that it is not much used.

Non-occupant co-borrowers: FHA allows a borrower to include the income of non-occupant co-borrowers who are close family members or can demonstrate a long-standing relationship with the primary borrower. That means that parents who want to help their children become homeowners can do it by becoming co-owners and co-borrowers. The loan amount must fall within FHA limits for the specific area, and the parents must meet the same underwriting requirements as the primary borrower.

Participating investors: Non-occupant co-borrowers are not allowed on conventional loans, but willing parents can become participating investors in a purchase classified as an investment rather than for occupancy. For the parents, being participating investors is the same as being non-occupant co-borrowers, since in both cases they are part owners, liable for the debt, and they must meet the same underwriting requirements as the primary borrower.

In most cases, mortgages on investment properties require 20 percent down, and are priced 0.75 percent to 1 percent higher than comparable loans to permanent occupants.

Reducing debt payments

If the debt-to-income ratio is swollen by large monthly debt payments, there may be ways to reduce the payments. Borrowers who have a 401(k) can borrow against it and use the proceeds to pay down other debt. Loans from 401(k) are not included in the debt ratio. Reducing debt payments by extending maturities is an option that should be exercised with care because longer-maturity debts usually have higher interest rates.

By Jack Guttentag
Inman News™

Sales Prospecting Best Practices

by Kelley Robertson

Prospecting is a key selling skill and a critical skill to develop if you want to increase your sales and achieve long-term success in sales. Yet, most sales people don’t invest enough time to this integral sales strategy. Part of the problem is that very few companies teach sales reps how to prospect. Here are five prospecting best practices for you to consider.

Allot a specific amount of time every day/week or month.

When my wife first started her software training business, our accountant said, “Devote a certain amount of time every week looking for new business.”

Prospecting is not a fun activity, at least not for most people. However, the more time you consistently invest prospecting for new business the more likely it is that you will never suffer from a sales slump. That’s why it is imperative that you block time in your calendar each and every week to prospect for new business.

Do you schedule prospecting time into your calendar every week?
Use a variety of methods to prospect for new business.

Too many sales people take the same approach week after week. Although they may generate good results it is critical that you use multiple methods and approach to uncover new business leads. Are you using enough prospecting methods to generate ample sales leads for your business?

Develop a powerful introduction.

The majority of sales people fail miserably at this. I recall talking to a person I met at a networking event and after a fifteen minute conversation, I still had no idea of what she did or what service she provided to her clients.

Jeffrey Hayzlett, former CMO of Kodak suggests that you have 18 seconds to capture someone’s attention and an addition 100 seconds to convince them why they should continue a conversation or schedule a follow-up call or meeting.

Is your introduction powerful enough to capture the attention of new prospects?

Master all types of media including; telephone, email, text, direct mail, social media

Today’s business offers many more ways to communicate with prospect which makes it easier AND more complex to connect with new prospects. This means you need to be able to communicate effectively in more mediums than before.

* Does your voice mail message help you stand out from your competition?
* Can you send an email that compels your prospect to respond?
* Do you know how to write an effective sales letter?
* Are you utilizing social media to connect with your prospects?

Create a compelling value proposition.

The vast majority of sale people simply do not create a compelling reason why someone should do business with them or buy their product or service.

Their voice mails messages, emails and sales pitches sound like everyone else’s and do little to compel a prospect to return their call, respond to their email, or call them back after a sales presentation.

Is your value proposition valuable enough to compel your prospect to want to talk to you?

Consistent and effective prospecting can make the difference between average sales and great sales results. If you are serious about increasing your sales, make the effort to apply the strategies into your daily and weekly sales routine.

Benefits of Home Office Leases…

There is a tremendous advantage for a business that rents a home office from the individual entrepreneur.

Rent for the use of property to which the business has no title and in which the business has no equity can be deducted by the business as a trade or business expense if the rent is paid in connection with the company’s trade or business, is ordinary and necessary, and is paid or incurred during the taxable year.

The home office lease provides the company with a framework for a business deduction for the amount paid to the employee, shareholder, officer, director or independent contractor. It provides the shareholder of a corporation or member of an LLC a framework for creating a home office deduction when allowing the company to use a portion of the individual’s home as a work place, storage, or garage for the company vehicle. The home office lease allows for the reimbursement of business expenses for employees of the company as working condition fringe benefits excludible from wages. It documents the actual commencement date and length of the lease agreement and allows for automatic renewals of the lease agreement to avoid additional lease preparation costs in the future. It is a legally binding, written lease agreement between the company and the employee, officer, director or independent contractor for use of a portion of the home. It complies with state law which generally requires all leases of real property for more than a stated period to be in writing.

If you still have questions about how you can benefit from a home office lease, call your attorney or CPA

Written by Spiegel & Utrera, P.A.’s

3 Year Tax Record Rule

In general, you should retain records pertaining to your tax return of a given year for at least three years. But keep in mind that there are always exceptions and that you should always consult with a tax professional regarding your tax situation before tossing out any documents that may be needed later as proof. To get you started here is a brief list of documents and considerations:

Capital gains and losses. While you own the investment these records should never be thrown out because investing and reinvesting is a cycle that occurs over many years or decades – you never know how far back you will have to go to prove numbers in the case of an audit. Once the investments are sold then those records should be kept for minimum of three years after having filed a return that reports the sale of such.

Home expenses. Records relating to expenditures and upgrades should be accessible until the property is sold. Due to the 1997 tax law, homeowners profiting from a sale reported on a tax return of $250,000 individual $500,000 joint or less will not be subject to taxes for that sale. Even so, it is still a wise habit to keep related records for at least three years.

Business records. When in doubt hold on to business tax records. For example, non-residential real estate can now be depreciated for over 39 years and after filing the return for the 39th year that return in worse case may be audited within the three year period that follows the filing.

Employment, banking, and brokerage documents. All W-2s, 1099s, brokerage, and bank statements should be kept for a minimum of three years after being used to file taxes. This also goes for supporting documentation such as receipts, mileage logs, diaries, checks, reimbursements, checks, and so on.

Tax returns. Consider the three-year statute of limitations and how long you think that it will no longer affect your future tax filings. A prudent habit is to keep your tax returns for at least 6 years after the date of filing.

Social security records. Make it a habit to eye-ball the quarterly statements that you get from the Social Security Administration or try to check it online at, make it a habit to confirm once a year that your payments have been credited to your account. If there is a discrepancy then you‘ll be happy you kept income records to reconcile and prove the correct amount.

Attitude = Altitude

“Your attitude, not your aptitude, will determine your altitude.” – Zig Ziglar

Zig Ziglar points out that attitude in business is all about enthusiasm.  Getting excited about your work and maintaining that excitement shows others that you believe in whatever it is you do.  If you don’t believe in yourself or your company, it’s going to creep into your attitude.  Your level of enthusiasm will determine how high you’re going to fly.
Be excited and make 2011 your best year yet…