HOW SELF EMPLOYED BORROWERS
CAN QUALIFY FOR A MORTGAGE

Most of the home buyers these days are familiar with the conventional way to qualify for the mortgage. You need to show the source of the money for the down payment, have sufficient income to qualify from the reliable sources like employment, and to have decent credit score and a minimum amount of debts. However, what if you are self employed and do not report your income conventional way?

To accomplish this type of the borrowers, lenders come up with alternative programs, where income is calculated from the alternative sources, like 12- or 24-month bank statement, or only P&L (Profit and Loss) for one year, or only Form 1099. All of these options are offered by the variety of mortgage banks where each has their own nuances for the underwriting.

We recently had a presentation at our office delivered by one of the banks. Their representative didn’t want to be recorded, so I will share with you some of the details by myself on my YouTube channel.

Manny Kagan,
President,
Pacific Bay Financial Corporation

(415) 225-7920; || [email protected]

NMLS #205637
DRE #00824602

I AM GRATEFUL…

I like to write things down. As a result, I’ve saved many notebooks with different writings through the years. Yesterday, I was browsing through some of them and came across one with affirmations I used to write down daily. I will share a short one with you, that I wrote eleven years ago, on 7/10/13:

I am grateful that I can originate loans and generate income.

I am grateful for love I have for Elfa (my wife).

I am grateful that I have the capacity to think and to enjoy life.

After reading these, I decided to resume the practice again, and to write down what I am grateful for on this day, every evening before going to sleep.

The next morning, I went for a walk with Max. During these walks I listen to various podcasts on YouTube. And as the universe was listening to my thoughts, I was presented with “You don’t need a doctor if you do this for 3 days” from Louise Hay, where she talked about gratitude. I was introduced to her years ago, through reading her books. The key message in them was, “If we are willing to do the mental work, almost anything can be healed”. On YouTube, I found many of her segments, including “Start your day with self-love and gratitude.”

I am grateful that you are reading my stories. I am grateful for the blooming flowers in my garden, which you can see in the three images above.

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LESSONS FROM LAG BA OMER

Every religious tradition is based on a story. In Judaism, many of the stories come from the Torah. For instance, it is written that from the second day after the Passover holiday, which celebrates the Jews’ Exodus from Egypt, and their fight for freedom, the Jews count seven weeks, called Omer.

This culminates with the next holiday called Shavuot. During the time of the Temple, it was customary to come to Jerusalem and to bring the crops from the early summer grain (the word “Omer” means “sheaf of barley”). The Temple was destroyed by the Romans in 70 AD, however the tradition of counting Omer continued. And then in 132 AD, during the rebellion of Israelis led by Bar Kohba against the Romans, many Jews were killed. This occurred during the counting of Omer time. Therefore, the 7 weeks of Omer became a time of mourning. In spite of this, rabbis decided to introduce a new tradition. It was announced that on the 33rd day of Omer, there would be a break in the mourning. Instead, it would be a day of joy with barbecues and bonfires to celebrate the Jewish unity and pride. It is the day to have weddings and for children to get their first haircut.

For me, this minor holiday is a good reminder that in our lives there are many events which can cause feelings like mourning. What rabbis taught us is that life goes on, but we do not need to forget others. This is one of the reasons why during a Jewish wedding ceremony it is customary to break a glass. This symbolizes the memory of the destruction of the Holy Temple.

Lighting a bonfire has its own tradition. I do not have photo images of bonfires, instead I am sharing with you these three beautiful images of the fire from a gas burner. Look carefully at the game of fire, I am sure you will find many interesting images there.

 

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CREATIVE WAY TO CALCULATE INCOME

One of the most important concepts of the mortgage loan underwriting is called “paid as agreed”. In other words, lenders need to be convinced that borrowers’ source of income will ensure that. And this can be tricky. It seems that the best guarantee is employees who receive a salary. But what happens if they lose their jobs, as it happened to hundreds who were let go by the large public companies? As a result, lenders constantly seek for the alternative ways to how to calculate clients’ ability to pay on time. These programs are called Non-QM (i.e. non-qualified mortgages, which do not require government scrutiny, and therefore have higher price (interest rate).

One of these options was introduced to us by Debra Kidder-Steere from Newfi Wholesale during our regular staff meeting. Income is calculated based on the funds invested into the retirement account. Thus, if the borrower has $360,000 in IRA or 401K retirement program, this can be translated into$10,000 a month as an income. Follow this link to watch a video recorded during our conversation with Debra.

There are many other ways we can use to qualify borrowers, especially borrowers who have limited (reported) income, like these who are self-employed clients.

Feel free to contact me on the phone or by email provided below.

I promise to help!

Manny Kagan,
President,
Pacific Bay Financial Corporation

(415) 225-7920;
[email protected]

NMLS #205637
DRE #00824602

I AM VERY GRATEFUL

In 1969 we lived in Riga, Latvia. At that time, my wife Elfa and I were twenty-two, and we had a one-year young daughter. Latvia was part of the Soviet Union. Socialism and antisemitism were a part of our life. It is impossible to go back in time and to understand why we decided to immigrate to Israel. At that time, it was unfeasible even to think about it. Nevertheless, the next step of our life journey began. Our request to immigrate to Israel was refused. For the next three years, we became refuseniks, with many challenges connected with this status.

Elfa took it upon herself to fight with the state. She demonstrated with other refuseniks and was arrested twice, while I worked at a garage to feed our family. We were refused again and again, until January 1972, when our family finally received permission to emigrate to Israel. What we did not know at the time the extent to which the American Jewish Community demonstrated in support of the Soviet Jews with the slogan, “Let My People Go”, which made our liberation possible. After moving to San Francisco in 1980 and settling down, I joined “The Bay Area Council for Soviet Jews”, an organization which continued to help Jews, who still were trapped in the USSR and met the people who helped us.

I decided to write about this experience after attending a fundraiser for the “Soviet Jewry Movement Archives Project”. This event brought back memories from over fifty years ago. Our life in San Francisco has been very rewarding. We learned, we grew, we created a business and helped many people. Despite the fact that we lived and worked in different countries before, over the last forty-four years, we became Americans. And I am very grateful to be part of the best country in the world.

The three images are of the American flag that I have encountered in various places.

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Best Lines of Credit

Are you among thousands of homeowners who benefited from the low interest rates on their home mortgages? Do you need extra money to pay off high interest credit cards or for any other needs? One of the possible solutions is to get l/c – line of credit or second mortgage, without touching the first mortgage. Last week we had a presentation of Stacie Cappadona of Spring EQ who shared her company’s second loans and lines of credit options.

We have other lenders who offer similar products, however, the uniqueness here is that Spring EQ can go up to 95% CLTV — combined loan-to-value (the first loan plus the second). They lend on 1–4-unit buildings and as well as the rental properties. Another unique feature can be when during the purchase transaction instead of getting (or not getting) jumbo loan with 10% down payment, which has limited options, to apply for two loans simultaneously. We recently helped to finance purchase of the house for $1,800,000. Buyers had only $200,000. We structured the first loan as conforming — $1,149,850. The second was $470,150 and the down payment was just $180,000. The remaining $20,000 covered closing costs, and there was no need for the reserves.

Follow this link to watch and listen to a fragment of our discussion. And, as usual, please don’t hesitate to contact me with any questions you may have on the subject: (415) 225-7920; [email protected].

Manny Kagan,
President,
Pacific Bay Financial Corporation

NMLS #205637
DRE #00824602

*Photo: GettyImages

HAPPY MOTHER’S DAY

There are two holidays that relate to everyone, regardless of their personal differences. One of them is Father’s Day, which is celebrated on the third Sunday in June, that will fall on June 16, this year. And Mother’s Day, falling on Sunday, May 12, this year.

There is a very interesting modern history behind both holidays; however, honoring parents goes back to Ancient Greece and Rome. More precisely, it goes back to the Commandments in the Bible, where “Honor thy Father and Mother” is mentioned twice. No doubt that the Hallmark Corporation is responsible for the popularity of both celebrations in our times.

However, this year, you have an incredible opportunity to celebrate Mother’s Day in the Pop-Up Market, which will take place in the wine bar “Grape in the Fog”. Please follow this link for details. There you will meet a group of very talented female artists and will have the opportunity to try some sweet and savory bites, and of course taste some wine. I found out about this event from one of my clients, Beth, who is the owner of the bar. She asked me if I would like to bring some of my photo-books as potential gifts for mothers. You can see book covers here. You can also order them on Amazon.

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You Can Get Insurance Coverage, But…

Last week I recorded a conversation with the insurance broker Alex Shkolnikov about current state of the Insurance business. After the interview I received many questions. Therefore, I invited Alex back to find out what are the clients’ options and to share his thoughts with my website readers and YouTube viewers.

You are probably aware that many major insurance companies left California. That means that if someone needs new insurance policy on the purchase or to renew the existing one, the process even to get a quote might take as long as two months. This creates issues, especially for the purchase transactions. We cannot qualify the client before we know how much the monthly insurance will cost. At the same time real estate agents need to write purchase transactions for the closing by a specific date. And what if there is no insurance policy yet? And what if the client is not qualified with a higher monthly insurance cost?

So, what is the good news? I lived all my life following the adage “Where there is a will, there is a way.” I will keep you posted.

Meanwhile you can reach Alex at (415) 819-8006. His email address is [email protected].

And if you have questions regarding mortgage, please contact me:
cell: (415) 225-7920;
email: [email protected].

Enjoy and share  with a friend!

Manny Kagan,
President,
Pacific Bay Financial Corporation

NMLS #205637
DRE #00824602