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What Every Business Owner Should Be Considering Regarding Their Mortgage.
You have heard the changes in the lending industry in the news. But, have you considered how these changes may effect you as a business owner?
Written May 09, 2008, read 0 times since then.
Washington - With the tightening of lender guidelines, there are things every business owner should be thinking about in regards to their home mortgage. Business owners have had the luxury over the past years, to take advantage of low documentation or no documentation loans. With the rise in mortgage defaults, lenders have found that a large percentage of these “stated” loans originally designed for business owners, were heavily abused, thus causing a larger incidence of default. So the lenders have reacted by tightening up and no longer allowing a borrower to state their income.
If not handled properly, theses guideline changes could cause huge problems for business owners.
Below are some items you may need to consider:
□ Are you currently on an adjustable rate mortgage? If you answered yes to that question there are some changes you may need to make in regards to how you are filing your taxes. Especially if your ARM will be adjusting in the next year or two. If you are on a 5 year ARM, you may have a little more time, but preparation is the key. I usually suggest a meeting be arranged with my client and their tax professional, to ensure everyone is on the same page.
□ Do you plan on moving in the next 1-3 years? If the answer is yes then all you read above applies as well. If structured properly, this transition can be done with ease. If ignored, you may need to change your plans.
□ Do you rely on the availability of your home equity line of credit while building your business? Many business owners have had the ability to tap into their home equity on what we refer to as a HELOC. This line of credit was used for many reasons. Some used it to get through the skinny months, while others like the flexibility in case that “opportunity knocked” requiring access to a lump sum of cash. Many lenders are in the process or have already cut-off many of their lines of credit. In other words, people have lost the ability to “charge” any more against the equity that was once available on their home. I have been requesting meetings with my clients who have a HELOC they rely upon for their business. There are certain indicators that can be looked at that let me know if your HELOC may be at risk. Again, education is the key.
Speaking to a qualified Mortgage Advisor can help you decide if today’s market changes will affect your financial future, and how you may need to restructure your current strategy . Acting now can save you from unnecessary stress in the future.
There are many other things that also need consideration. What field of business do you operate in? There are many small business owners that rely heavily on the real estate market to keep them going. Contractors and sub-contractors understand what I am saying here. Others need to think of some things too. Do you offer products used in the construction industry? If you are manufacturer that rely's on the construction industry you may need to be taking steps as well. If you can see the possibility of a decrease in your income this year, you may need to be taking some actions as well. Underwriters are taking a good look at financial statements to see if there has been a downward trend in income. If you see that as a possibility, then you should speak with a professional about your siuation as soon as possible.
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Lisa Kee is affiliated with Mortgage Advisory Group. If you have further questions on this or other topics, you can contact Lisa Kee at (425)212-2782.
Learn more about the author, Lisa Kee.
Article tags
- business owners
- lisa kee
- mortgage
- heloc
- arm
- guideline
- industry
- mortgage advice
- help for business owners
- adjustable rate mortgage
- mortgage changes
- changes in guidelines
- mortgage industry changes
- 2008
- construction industry
