Don't think you can get a mortgage because you are self-employed?

Dec 08, 2020

Do you want to know the number one reason why many self-employed people don't think they get get a mortgage?

They believe lenders are biased against self-employed borrowers.  To a certain degree; I think they are right!

An employee earning a regular paycheck can get fired or laid off with income going to zero in a heartbeat.  A self-employed person generally has more resources to get additional clients, restructure their business or perhaps work a few more hours to avoid losing income.  You are not going to fire yourself - right?  [Okay, I've had days when I should have definitely fired myself ... but the sevreance package was horrible.]

It's not "fair," but the lender is really qualifying you AND your company.  We can cry about it; but the better approach is to learn how to be a high quality self-employed borrower.  Here's what I've learned based on  years of lending for business owners and being self-employed for most of my adult life.

This...

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Why HOW Your Wages Are Paid Matters To Your Lender

Dec 06, 2020

Cash, income, credit history...the big three of getting an approved home loan. All equally important and all have very specific guidelines and documentation requirements. This article is going to talk about income and why how you are paid could make a huge difference in the amount of the mortgage you may be eligible to borrow.

There are many methods of employment compensation. Just to name a few:

  • Hourly
  • Hourly with overtime
  • Hourly with bonus
  • Salary
  • Salary with bonus
  • Salary with commission
  • Straight commission 
  • Wage paid by your own company (or family business)

Ultimately what your lender wants to establish is the stability and consistency of your income. If you work a standard 40-hour week and are paid hourly or on a set salary; that's the easy part and is fairly straightforward. Anything outside of that gets special attention.

Overtime and Bonus Income

Typically your lender will want to verify that you have received either over time or bonus income for a minimum of two years....

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Knowledge Is Power on the Path to Homeownership

Dec 04, 2020

Knowledge Is Power on the Path to Homeownership | MyKCM

Homeownership is on the goal list for many young adults, but sometimes it’s hard to know exactly how to get there. From understanding the homebuying process to pre-approval and down payment assistance options, uncertainty along the way can ultimately hold some buyers back.

Today, there are over 75 million Millennials and 67 million Gen Z’ers in the U.S., making up a significant number of both current and soon-to-be homebuyers. According to a recent Fannie Mae survey of more than 2,000 of these individuals:

“88% said they are confident they will achieve homeownership someday.”

In addition, the survey also reveals that for younger generations, the motivation to own a home may be more emotional than financial compared to previous generations:

  • <50% say they want to use their home as an asset
  • 78% believe it’s the best way to live the way they want, without restrictions
  • 80% believe homeownership is the best way to make it on...
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Americans Rank Real Estate Best Investment for 7 Years Running [INFOGRAPHIC]

Aug 03, 2020

 

Americans Rank Real Estate Best Investment for 7 Years Running [INFOGRAPHIC] | MyKCM

Some Highlights

  • Real estate has outranked stocks, savings accounts, and gold as the best long-term investment among Americans for the past 7 years.
  • The belief in the stability of housing as a long-term investment remains strong, despite the many challenges our economy faces today.
  • Of the four listed, real estate is also the only investment you can also live in. That’s a big win!

Are you ready to buy?  Be a confident buyer with the knowledge that your finances are in tip top shape.  Subscribe below to be notified of when my new course "First 5 Steps To Buying A Home" becomes available.  Coming Soon!

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Buyers: Are You Ready for a Bidding War?

Jul 30, 2020

Buyers: Are You Ready for a Bidding War? | MyKCM

With businesses reopening throughout the country and some experts indicating early signs of a much-anticipated economic recovery, more homebuyers are actively entering the housing market this summer. Today, housing is truly driving the U.S. economy forward. With so many buyers looking for homes to purchase and so few houses for sale right now, there’s a disconnect between supply and demand. This imbalance is pushing home prices upward while driving more bidding wars and multiple-offer scenarios. Danielle Hale, Chief Economist at realtor.com explains:

“People are surprised that prices are rising, not falling, because in the last recession home prices fell, the difference this time is the severe shortage of homes for sale…We are seeing bigger price increases with [a limited] number of homes…That is likely to lead to more competition and potentially multiple offers and bidding wars.”

According to the...

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What Are Experts Saying about Home Prices?

Jul 27, 2020

What Are Experts Saying about Home Prices? | MyKCM

Last week, a very well-respected real estate analytics firm surprised many with their home price projection for the next twelve months. CoreLogic, in their latest Home Price Index said:

“The economic downturn that started in March 2020 is predicted to cause a 6.6% drop in the HPI by May 2021, which would be the first decrease in annual home prices in over 9 years.”

The forecast was surprising as it was strikingly different than any other projection by major analysts. Six of the other eight forecasts call for appreciation, and the two who project depreciation indicate it will be one percent or less.

Here is a graph showing all of the projections:What Are Experts Saying about Home Prices? | MyKCMThere’s a simple formula to determine the future price of any item: calculate the supply of that item in ratio to the demand for that item. In housing right now, demand far exceeds supply. Last week mortgage applications to buy a home were 33% higher than they were at the same time last year....

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Two Big Myths in the Homebuying Process

Jul 25, 2020

Two Big Myths in the Homebuying Process | MyKCM

The 2020 Millennial Home Buyer Report shows how this generation is not really any different from previous ones when it comes to homeownership goals:

“The majority of millennials not only want to own a home, but 84% of millennials in 2019 considered it a major part of the American Dream.”

Unfortunately, the myths surrounding the barriers to homeownership – especially those related to down payments and FICO® scores – might be keeping many buyers out of the arena. The piece also reveals:

“Millennials have to navigate a lot of obstacles to be able to own a home. According to our 2020 survey, saving for a down payment is the biggest barrier for 50% of millennials.”

Millennial or not, unpacking two of the biggest myths that may be standing in the way of homeownership among all generations is a great place to start the debunking process.

Myth #1: “I Need a 20% Down Payment”

Many buyers often overestimate what they need to...

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Real Estate Tops Best Investment Poll for 7th Year Running

Jul 15, 2020

 

Real Estate Tops Best Investment Poll for 7th Year Running | MyKCM

Every year, Gallup conducts a survey of Americans to determine their choice for the best long-term investment. Respondents are asked to select real estate, stocks/mutual funds, gold, savings accounts/CDs, or bonds.

For the seventh year in a row, real estate has come out on top as the best long-term investment. Gallup explained:

“Real estate remains the most favored investment to Americans, as has been the case since 2013, when the housing market was on the rebound. More than a third of Americans have named real estate as the top investment since 2016.”

This year’s results indicated 35% of Americans chose real estate, followed by stocks at 21%. The full results covering the last decade are shown in the chart below:Real Estate Tops Best Investment Poll for 7th Year Running | MyKCM

Bottom Line

The belief of the American people in the stability of housing as a long-term investment remains strong, even through the many challenges our economy faces today.

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Should We Be Looking at Unemployment Numbers Differently?

Jul 13, 2020

 

Should We Be Looking at Unemployment Numbers Differently? | MyKCM

The New York Times recently ran an article regarding unemployment titled: Don’t Cheer Too Soon. Keep an Eye on the Core Jobless Rate. The piece suggests we should look at unemployment numbers somewhat differently. The author of the article, Jed Kolko, is a well-respected economist who is currently the Chief Economist at Indeed, the world’s largest online jobs site. Previously, he was Chief Economist and VP of Analytics at Trulia, the online real estate site.

Kolko suggests “the coronavirus pandemic has broken most economic charts and models, and all the numbers we regularly watch need a closer look.” He goes on to explain that the decline in the unemployment number reported by the Bureau of Labor Statistics (BLS) earlier this month was driven by a drop in temporary layoffs. If we strip those out, we’re left with what Kolko calls the core unemployment rate....

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New Index Reveals Impact of COVID-19 on Real Estate

Jul 08, 2020

Earlier this month, realtor.com announced the release of their initial Housing Recovery Index, a weekly guide showing how the pandemic has impacted the residential real estate market. The index leverages a weighted average of four key components of the housing industry, tracking each of the following:

  1. Housing Demand – Growth in online search activity
  2. Home Price – Growth in asking prices
  3. Housing Supply – Growth of new listings
  4. Pace of Sales – Difference in time-on-market

The index then compares the current status “to the last week of January 2020 market trend, as a baseline for pre-COVID market growth. The overall index is set to 100 in this baseline period. The higher a market’s index value, the higher its recovery and vice versa.”

The graph below charts the index by showing how the real estate market started out strong in early 2020, and then dropped dramatically at the beginning of March when...

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