Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
New years and new beginnings are always a chance for people to take out a blank sheet of paper and “start from scratch.” It’s a shame that many people don’t contemplate about new opportunities more often. It is often the empty canvas that helps promote the best ideas and creativity. In personal finance, I think this is an excellent opportunity to take a step back and plan ahead while making the necessary adjustments to accomplish and achieve what you want.
I was recently speaking with a woman who I would consider to be highly sophisticated when it came to financial competence. After a few minutes I realized that despite her advanced fiscal literacy, when it came to mortgage financing, she was similar to the first-time buyer I spoke to earlier in the day. Her unease was related to the fact that she was in a vicious cycle when it came to monthly reoccurring debts. She explained how the debt slowly mounted over the past few years and that it was taking its toll on her life.
The problem was, as she explained, as a person who recently went into “private practice consultation,” she was not earning enough money to qualify for a mortgage. It took some time for her to gather and send me the necessary documentation, but we went through the numbers, and indeed she wasn’t making enough money to qualify for a mortgage “on paper.” Her ears perked up as she asked, “Is there a but…?”
It’s true – on paper, she did not qualify for a conventional mortgage. The mortgage person she spoke to a few months ago at a family party was stating the obvious, but he failed to delve a little deeper. He also neglected to mention that there are new and innovative common-sense mortgage programs that can offer alternative mortgage options to people who don’t meet the standard bank borrower profile.
We began offering some of these “alternative” mortgage options a few months ago, and I must say, it’s a game changer. Under some of these programs, you can have it all – “have your cake and eat it too” as the saying goes. Almost 90% of conventional mortgages have been sold to governmental agencies over the past few years. Agencies such as FHA (aka Ginnie Mae), Fannie Mae, and Freddie Mac have been the source of conventional financing and strictly adhere to the “taxable income” qualification model. Simply put, what you pay taxes on, is your qualified income for common mortgage purposes.
It is no longer the case as the “Secondary Market” for alternative loans has slowly evolved and is being opened up to judicious lenders. We are fortunate enough to have test piloted many loans that fall into this category and are seeing tremendous success with the implementation and usage of these programs to benefit borrowers who cannot access traditional financing. If financial resolutions are in your New Year’s wishes, you should consider exploring some of these options which might be life-changing.
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