The following guest post has been contributed from Gary Gentry of Quality Residential Inspections, Raleigh NC. Thank you for the suggestions, Gary!

Image courtesy of Gary Gentry.

Another Valentines Day has come and gone…(umm, you did get your sweetie some flowers or take em’ out for a good dinner?). The month of February is a great time to think about showing your home a little love too.We make Cupid smile by the things we do for the people in our lives every Valentine’s Day by letting them know we care about them.  What about Hestia, the Greek goddess of hearth and home? She needs something to smile about too, wouldn’t you say?

Since love is already in the air this time of year, it’s a great time to show your humble (and most often unintentionally neglected) abode that you really do appreciate it for keeping your family dry, warm, and comfortable.

What can you do, quickly and easily, to show your home a little love? Well, let’s see….

1.) You could decide to finish some of those half-completed projects; you know the ones to which I refer, right? Or you could decide when to start that new improvement project you’ve been considering for…how long is that now?

2.) You could make it a point to assess the condition of some of the systems and components of the home…and to accomplish some routine maintenance. Some really easy things you can do are:

3.) You might check the return filters of your heating and cooling systems.  If they’re dirty, replace them. They’re cheap and easy to replace. Then, make it a point to keep them clean as well as to change them every 30 or 40 days of system use.

4.) You could test all of those Ground Fault Circuit Interrupter (GFCI) devices that you might find in your kitchen, bathrooms and garages…you know, the ones with the little “test” and “reset” buttons on them. Push the test button of the receptacle (or maybe at a breaker in the electrical panel) and reset them. If they don’t respond to your manual test (or won’t reset), then have them replaced by an electrician in the interest of safety.

5.) You could test all of your smoke detectors to make sure they’re able to do their job in alerting you in case there was a fire…if you push and hold the test button, and nothing happens, find out why and have them replaced or otherwise have the issue corrected.

6.) You could endeavor to decrease the clutter in you home…to get rid of any of that “stuff” that you haven’t used for years and have no earthly idea as to when you might use it again. Someone out there might be able to use those unwanted items…so make a donation to a worthy charity or sell them for a few bucks and put the proceeds toward something nice for your home.

7.) You might check your water heater for leaks, unusual noises that might indicate a problem that might need to be addressed, etc.

8.) You might make it a point to visit the spaces of your home where you rarely venture…attics and crawl spaces. You don’t have to take an extended vacation in those places so you don’t need to pack a suitcase or anything like that. But, do take a little time to look around and see if anything is wet that shouldn’t be wet, or if there are any unusual odors. If things don’t seem right in some way, then follow up with an appropriate professional to make sure no costly issues are developing.

9.) You could walk around the outside of the home and see if any shrubbery or tree limbs need to be trimmed away from the walls or roof. If so, make it a point to get that taken care of before any resulting damage can occur.

Take just a little time to show your home some love. Your home…and maybe your sweetie, too…will appreciate it!

What are some other things you can do this time of year that benefits your home? Please share your ideas in the comments below.

The following piece is contributed by Hugh Page of our FM Lending group. Thanks, Hugh!

You have probably heard of the popular saying that “there is no free lunch.”  Therefore, when you are offered a service or a product for free we are all conditioned to look for a “catch” of some kind. The real estate and mortgage industries are no exceptions in this regard. How many times have you heard a mortgage company say—-refinance at “no cost”?  Contrary to popular belief, there is no free lunch. There are no “free” refinances. There is a cost to every mortgage, but the cost is dependent on several factors. Let’s take a look.

There are closing costs associated with both purchasing a home and/or obtaining a mortgage. With regard to mortgage costs, you may pay taxes, appraisal and credit report fees, fees charged by the mortgage company, fees charged by the settlement company and more. On a $300,000 mortgage, the costs may be in the range of $3,000 to $6,000 and even higher for someone with poor credit.

So how can you get by with not paying these costs?

Simply, the mortgage company can charge you a higher rate and recover the costs in the secondary market after the loan is sold. Explaining the process of selling the mortgage is not important at this juncture. However, explaining the choices given to consumers is very important. Let us take a look at a range of choices that a consumer is likely to be presented with in this regard. Note that the rates and costs shown are merely for illustrative purposes and do not represent actual mortgage costs and rates.

If you look at the example presented below, you can see generally that the costs are lower when the rate is higher. This consumer can opt for a rate of 4.0% and pay $5,000 in costs or the consumer can opt for a rate of 5.0% and pay no costs. One is not a better deal than the other as the mortgage company may generate the same revenue in each situation.

$200,000 Mortgage

Rate                  Payment*              Costs
5.0%                  $1,074                      0
4.5%                  $1,013               $2,000
4.0%                  $   954               $4,000

*Note that the payments are fictitious for comparison purposes only and are meant to represent only monthly principal and interest payments and not taxes and insurance.

So which is better for the consumer? Simply it is a matter of time. In this case we must make some very simplistic assumptions—

The present value of money is the same as the future value of money. High levels of inflation can actually make money paid in the future less expensive than money paid today.

The consumer can afford to pay the costs and can qualify at any rate (they have the choice). The key is – many consumers do not have cash or equity in their home to pay these costs or need a lower rate to help them qualify.

Looking past these assumptions as well as the fact that some of the costs as well as the payment can be tax deductible, if the consumer uses the mortgage for a long time, they may be better off with the lower rate and higher fees. In this example, if they pay $4,000 in fees, they also pay $120 less monthly. It can be easily seen that they will recover the cost of the fees within 34 months, or less than three years. If they are going to purchase another home or refinance in less than three years, they are better off not paying any fees and going with the higher rate. If they don’t purchase or refinance for ten years, they are better off paying the higher fees.

It is important to note that we are not advocating a “no cost” mortgage or a “high fee” mortgage. We are pointing out that every mortgage has a cost and you must look at the individual situation to see what is right for you. The decision may hinge upon many factors, including time, tax brackets, cash reserves and more.

There may be no free lunch, but it is good to have choices.

Image courtesy – http://home.scarlet.be/catalin.gelu/free.jpg

Yes, you can judge a book by its cover, and here’s why!

The following is contributed by Holly Hayes, an Agent out of our Fonville Morisey Croasdaile office. Thanks, Holly!

I have worked with Honey Johnson (@HoneyStages on Twitter) with Triangle Staging and Design for over 4 years now…and never been less than impressed.

From the most vanilla and vacant homes to the homestead of a color-blind hoarder, the stats show a good REALTOR® coupled with the expertise of a good stager make the sale happen.  In the Raleigh-Durham-Chapel Hill housing market it’s a pricing war and beauty contest, and not the toddlers and tiaras kind. The Miss America meets Millionaire Matchmaker kind.  The key to knowing you have found a good fit in a REALTOR® is when their local market knowledge matches their proven sales record.  Don’t get me wrong, listening skills and personalities in harmony are important too.  This does not mean they tell you what you want to hear.  A true professional will tell you what you need to hear.

White house’s don’t sell.  Emotional attachment doesn’t equal top dollar.  And yes, cleanliness is next to godliness.

Believe it or not, a lot of psychology goes in to selling houses…and in the Triangle region of North Carolina it’s no different.  On average a prospective buyer will spend 11 minutes inside your home before they are on to the next one.  They need to be able to see the property’s true potential and value so it will make the ‘short-list’.

So even though sellers seek our advice, they are often willing to incur the added expense of bringing in a professional Stager.  This especially pays off with new construction and vacant homes!  It also makes a world of difference to have fresh eyes on your own furnishings.  A two-hour consultation versus a $5,000 price reduction is a win/win any day!

Honey Johnson with Triangle Staging & Design is the Triangle’s top Home Stager.

Their most popular services are:

• 2-hour consultations (‘the walk & talk’)
• Occupied Staging Enhancements
• Vacant staging

In the last six months, Honey has performed her magic on four of my hardest to sell homes.  The before and after photos say it all!  New paint colors bring out the warmth in hardwood floors.  219 Bluefield Rd. was painted with Sundew by Sherwin Williams (SW7688).  221 Bluefield Rd. was painted with Croissant by Sherwin Williams (SW7716).  Other best sellers are Ivoire (SW6127), Kilim Beige (SW6106), and Believable Buff (SW6120).  White trim, not off-white or stained trim, is a MUST!

Another key point is to limit your home’s color palette to three colors….two primary and one accent.  Keep the eye flowing.  Honey uses a “3D Marketing Focus.  The basis of this is a sense of balance: from left to right and from top to bottom.  Thus, we create a complete or full staging that plays to this sense of balance.  The next aspect is to add layers of richness with color and texture that support a listing’s asking price, not make it look cheaper.”

Below are photos of the homes that Triangle Staging and Design has helped me sell (referenced above) and here are their stats:

110 Bluefield Rd. (townhome in Chapel Hill)

• Days on Market before staging:  379
• Days on Market after staging: 58

219 Bluefield Rd. (townhome in Chapel Hill)

• Days on Market before staging:  255
• Days on Market after staging: 34

221 Bluefield Rd. (townhome in Chapel Hill)

• Days on Market before staging:  10
• Days on Market after staging: 14

1104 Professor Place (home in SW Durham)

• Days on Market before staging:  74
• Days on Market after staging: 36

Triangle Home Staging and Design planted its roots in 2004. With a team of 5 professional Stagers, they stage approximately 300 to 500 homes in value from $100K to $3M. They also offer full design services with a show room containing hundreds of samples, including low-cost carpet resources.

Honey Johnson and Michele Kurelich are both certified instructors for the NC Real Estate Commission.  They teach a 4-hour continuing educational elective course called “The Staging Advantage.”

So, are you in the process of selling your home? If so, has this given you some incentive to explore the option of staging? Conversely, if you have had your home staged, did it sell faster? What was the end result? We’d love to hear. Leave a comment below!

On Monday, February 13th, Fonville Morisey agents and staff were treated to an exclusive session with Joe Niego (co-creator of the sales training program 100 Days to Greatness®) after the initial Buffini & Company session “3 Breakthrough Strategies”  for real estate professionals.

Held at the North Raleigh Hilton, the initial session was attended by hundreds of REALTORS® around the Triangle, many of which were from the Fonville Morisey Realty family.

The initial session focused on* -

• The proven Referral System you can employ to attract, convert and keep clients for life
• 5 key areas of skill development every agent needs to focus on
• How to effectively invest in yourself to grow your business and increase your production

*taken from Buffini & Company information on the Success Seminar

There was even a drawing for a DVD kit of a Buffini & Company 2012 Turning Point two-day seminar.  Our Kay Dunson of our Chapel Hill office won the BIG prize!

After a short break, Joe held an exclusive session for our agents and staff where he shared additional tips and best practices. The top 3 were -

Your Tomorrow Builds Upon Today

What you’re doing now determines the success of your tomorrow. Build opportunity with what you have in your day everyday. Stay focused. Are you diligent? (i.e. do you get to work on time or do you just stroll into the office?). How you use your time wisely and your attitude for each day is a step on the ladder to your success.

$$ is a Result of WHAT You Do

Money follows passion. Are you willing to suffer to get what you want because that’s what passion really is (passion stems from the French word “passio” meaning suffering). Consistency is key. Surround yourself with people who are passionate and be sure you have given yourself specific goals. Just saying “I want to make more money this year” is not nearly as definable or attainable as “I want to make X amount of dollars by the end of the 2nd Quarter.” Take it a step further and put measurable systems in place to ensure you are reaching your goals.

Structure is Your Friend

Here Joe used the analogy of a teacher in that a teacher’s day is extremely structured defined by lesson plans and ringing bells. As independent contractors, REALTORS® need to also impose some element of structure into their days, weeks, or months so they can stay focused. Structure will help you focus and focus will lead to results.

The exclusive session was well-attended and well-received by our Fonville Morisey agents and staff. Thank you, Joe for sticking around to provide us with some more of your awesomesauce!

Fonville Morisey Highway 54 Sales Manager, Brandon Penny was so moved by the sessions he attended that he blogged about his experiences and below is a slideshow of some of the images of the day. Feel free to check out our Facebook Page for more.

If you attended, what tip(s) stuck with you the most? We’d love to hear it. Maybe you’ll inspire our readers!

Today is the day. Valentine’s Day – a day devoted each year to the ones you love. Statistics show that both men and women spend

Guglhupf in Durham. Image courtesy of Lisa Sullivan.

money on cards and gifts for this special day. Probably the most interesting item of note – parents will budget some spending toward their children too. Like we said, it’s a day devoted to the ones you love.

Since we had such an overwhelming response from our Fonville Morisey family for the piece we did on restaurants in Raleigh, we expanded the idea to include restaurants in the Triangle to take your Sweetie to on Valentine’s Day. Chances are some of these require reservations while others might not. Either way, here are our choices for Valentine’s Day eats.

Saint Jacques

Saint Jacques is “true French”specializing in French cuisine. Located at the North Ridge Shopping Center on Falls of the Neuse Road, this romantic restaurant does take reservations and if a little French fare is on your radar, be sure to check them out.

Amanda Boswell sums it up best - “It’s very elegant and romantic.” Sometimes that’s all a girl wants!

The Melting Pot in Durham

While this is a popular chain restaurant it’s also got an interesting menu – fondue all the time. Cheese fondue. Chocolate fondue. Located near the equally popular Streets at Southpoint Mall in Durham, The Melting Pot is a different kind of romantic dining experience.

“You can’t go wrong with The Melting Pot on Fayetteville Rd. Lingering is encouraged and the atmosphere is conducive to an intimate experience.” ~Robbie Davis

Nina’s Ristorante

Located in North Raleigh on Lead Mine Road, this Italian restaurant was established in 1999 by owners Chris and Nina Psarros. Nina was born in Sicily and has studied with world-renown chefs truly bringing authenticity to her cooking. Combined with the the ambiance, this is one romantic destination not to be missed!

The restaurant is small and quaint.  I think the coziness of the restaurant as well as the lushes dishes create a romantic environment. ~Kim Skiba

The Fearington House

Located in historic Pittsboro, North Carolina this restaurant and Inn bring romance to a whole new level. With dishes such as Butter Poached Crab and Sweet Potato Risotto, your mouth just waters. Add the ambiance and you have a truly romantic destination to take your Sweetie too. Fran Mahoney explains -

“My favorite romantic dining spot would have to be Fearington House in Pittsboro. The last time my husband and I were there, we had a table by a window looking out on the gardens and snow was falling. It was absolute magic!”

The Peddler in Raleigh

If a fine char-broiled steak cut at your table is more your style, check out the Peddler in Raleigh. They’ve been serving customers since 1969 and are a popular place to dine. Just ask Autumne Bennett -

I’m partial to The Peddler in Raleigh, off of Glenwood. It’s where my husband and I went for our first Valentines. It’s kind of old school steakhouse, blue leather seating, wood paneling, they keep the menu simple, steak and salad, a few basic side dishes. Been around FOREVER. Can’t go wrong.

Zely and Ritz in Raleigh

Check out this little romantic hideaway in Glenwood South. We’ll let our own Angela French tell you why.

We have never had a bad meal at Zely & Ritz, http://zelyandritz.com/, one of the Glenwood South restaurants tucked away in the bottom floor.  The menu varies, and the ingredients are boasted to be local and fresh, with striking combinations of ingredients.  It’s a little pricey, but eclectically romantic.  Usually need a reservation on the weekends, too!

Guglhupf

Located on Durham-Chapel Hill Blvd in Durah, Guglhupf is a true German restaurant founded by a true German, Owner Claudia Kemmet-Cooper. Her attention to quality, detail, and artisanship in everything a guest encounters there is top notch.

My husband and I went there almost a year ago and between the food and the ambiance, it was definitely a romantic evening. Guglhumpf specializes in German fare and each of our dishes were scrumptious. For desert, take your pick! They’re pastries are out of this world. ~Lisa Sullivan

Margaux’s

Located on Creedmoor Road in North Raleigh, with dishes like Pamlico Sound Crab Cakes to Freshly Shucked Oysters on the Half Shell and everything in between, Margaux’s has something for every palate.

Margaux’s gets my top vote!  The food is always fantastic and the atmosphere is perfect, great food & fun place to go! ~Mark Parker

Bloomsbury Bistro

Stretching the boundaries of French cuisine, Ruth Hauser describes Bloomsbury Bistro’s ambiance like this -

For favorite romantic restaurants my pick is Bloomsbury Bistro at Five points in Raleigh. It’s quiet, relaxed and sophisticated and has received national accolades for it’s creative and seasonally changing menu. It’s located in the Bloomsbury Historic District of Raleigh and is surrounded by homes displaying the architecture styles of the early 1920′s. There was once an amusement park in the area. It is now closed but the Dentzel Carousel that was there is now at Pullen Park.

What’s YOUR favorite romantic restaurant in the Triangle? Did we miss it? Do share!

No. There isn’t “an app for that”. Rather, we’ve done the research, listened to the experts, paid careful attention to the direction digital media is going in and created what we think is the cutting edge mobile site in our market. (Yes, we are patting ourselves on the back.) It’s taken more months of blood, sweat, and tears (ok…maybe sweat) to make this happen but we are proud to announce FMRealty.com’s brand new mobile website!

If you’ve got a smart phone and you’re looking to buy a home in the Triangle, your life just got a whole lot simpler.

FMRealty.com mobile is designed to work with a much smaller screen and takes advantage of built-in smart phone functionality.  Focused on the areas of Property Search, My FMRealty (our own user-login community), and the ability to locate and contact our agents with just a tap of the screen, our mobile site will save you time in your home search, OR if you’re looking to list your home with one of our 800+ agents.

The Home Page and subsequent pages are all designed to be simple and easy to use. Tap the “Search for Homes” feature and a property search can be done based on your current location, or you can enter one in. Additional selections such as Open House, FM-Listings, New Listings, etc. help you to narrow your search based on your specific parameters.

If you’re looking for a particular agent, not only can you search for him or her but, when the agent’s screen opens, you can call or text them directly from it. Talk about convenience!

With the MyFMRealty component, all of your Favorites, Notes, or Searches you’ve made on FMRealty.com (while logged into MyFMRealty) via your PC or MAC, are accessible through the mobile site as well. Conversely, if you perform a search on your smart phone and you wish to Favorite a particular listing and/or create a Note for it while logged into MyFMRealty, the very same information you’ve just Favorited or Noted is now available on your PC or Mac!

Additional key features -

• No download is required
• It’s a location-aware website
• It integrates phone, GPS and text capability all in one and
• Uses the same data as our full website

So, if you haven’t checked out our mobile site yet, we encourage you to. Pull out that iPhone, Droid, Blackberry Torch, whatever you’ve got, open your browser, and type in FMRealty.com. Check us out!

Got any feedback for our Webmaster? The easiest way to share your experience while using FMRealty.com mobile is to click the word “Feedback” at the top of any screen you are on and complete the fields on the screen that follows.

Now that you’ve played around with it, what’s your favorite feature(s)? Please leave a comment below.

Images courtesy of our Chief Information Officer, John Schweighardt. Thanks, John!

Despite a tough housing market across the nation over the last couple of years, the Triangle continues to improve resulting in numerous accolades and this time one comes from a popular independent source for real estate news, Inman News .

For the second year, Inman News has compiled a report that “examined housing, economic and demographic data for metropolitan areas nationwide to identify 10 housing markets to watch in 2012” (Inman News, http://www.inman.com/reports/markets-watch2012). This is great news for the Triangle!

Local media station WRAL took notice and even produced a report on the Inman News ranking:

But, is there some discrepancy in the figures?

Fonville Morisey agent and frequent contributor to WRAL, Al Schnaidt has this to say –

“Being ranked the No. 1 Housing Market to watch in 2012 is a great positive for Raleigh Cary.  However, a flawed methodology led Inman News to suggest that house values had appreciated 7.3% and that is simply not the case.  Our area’s house values have been stable for over a year and that, in and of itself, is great news.  We will begin to see positive appreciation when inventories normalize which should be within the next 18 months or so.

Inman News also highlighted the strongly favorable Housing Affordability Index which is good news worthy of mention.  Affordability will be a crucial enabler when the future buyers who are currently in rental units decide it is time to purchase a home, a phenomenon that will occur when confidence in the economy returns. “

Fonville Morisey is thrilled that Inman News recognized the Raleigh-Cary market! We too continue to see growth in our own business and that’s thanks to all of our buyers and sellers who continuously choose Fonville Morisey agents and brokers.

What are you hearing in the Triangle real estate market? We’d love to hear from you! Perhaps your insights will spur another blog post on this very topic.

Special thanks to Fonville Morisey Vice President, Vickie Cardin and Al Schnaidt for contributing to this piece.

The following is contributed by Tom Shaffer, Sales Associate at Fonville Morisey Croasdaile. Thanks Tom!

Giving back to the community is a part of who we are. Some of us were taught at an early age to contribute our time, share our income, and help those who are less fortunate, while others realize this attribute because of some significant event in our lives. It may come to us because we were the recipient of goods, scholarships, a helping hand or the just plain ability to finally share some of our income, or we may have learned this important duty just by watching the joy and pleasure of others giving to the community.

I have been at the Croasdaile office for 5 years and have witnessed how much our Associates have come together and helped individuals and groups in our community. Here is a short list of how we give back to the community:

1. Belong to service organizations such as Ruritan, Exchange, Sertoma, Lions Clubs which help those in need.
2. Donate time to school tutoring programs and/or help to organize fund raisers.
3. We encourage our children to join youth groups such as Girl Scouts, Cub Scouts and Boy Scouts.
4. Donate to NC Food Bank, Salvation Army, Habitat for the Humanity, Red Cross, participate in the Annual Crop Walk which feeds to poor in the community and the world.
5. Donation of time and funds to our churches that in turn contribute to our community needs.
6. Volunteer and contribute to the Durham Crisis Response Center, Duke Children’s Hospital and UNC Children’s Hospital.
7. Drive for Meals on Wheels of Durham or help serve meals at the Homeless Shelter.

This is only an abbreviated list of what our Associates do for our community. Did it give you an idea of how you can help OR did you discover that you are also giving back to the community? Please leave a comment below. And, if we missed some ideas, please share those as well.  You never know who you’ll inspire!

Image courtesy of Gina Trapani on Flickr.

So, you are self-employed and you’re now trying to navigate the mortgage qualification maze.  Based on all the horror stories you’ve heard, even if you are not self employed, mortgage qualification is not a fun exercise.  The paperwork requirements alone are enough to make your head spin.  Mortgage Underwriters are seemingly looking for two pints of blood from borrowers these days, and especially the self employed borrower before approving a loan application.   Many self employed borrowers have simply held off purchasing a home for years because they believe that verifying income may be difficult or impossible.

In this article we’ll talk about how mortgage lenders treat self employed individuals and try and help you understand the mortgage process better.

So what does it mean exactly to be “Self Employed”?    In the mortgage underwriting world, to be considered Self Employed, an individual must own 25% or more of the business entity in question which provides their income.   Here are some examples of self employment:

• Sole Proprietor. The simplest form of self employment where you own 100% of the business.  You are not incorporated so you file a simple Schedule C on your personal tax returns and the business income left over after all business expenses are deducted flows to your taxable income on page 1 of your return.
• Sub-Contractor.  Many workers who are hired by companies on a sub-contracting basis fall in to the self employed category.  Essentially these folks are sole proprietors.  If someone receives a 1099 from their employer at the end of the year and not a W2 that is an indication that they are a sub-contractor which means they are self employed. These folks are also responsible for paying their own income and social security taxes.  Many real estate agents fall into this category.
• S Corporation or LLC.  Borrowers who organize their business in this fashion are taking advantage of the unique legal and tax aspects of a Corporation.  If a borrower owns 25% or more of an S Corp or LLC business, they are considered self employed under mortgage guidelines.  These individuals have to file 2 sets of tax returns.  A personal 1040 for themselves and an 1120 or 1120S Corporate tax return for their business.  Any income shown on the 1120 after all business expenses are deducted flows to their personal 1040 tax return in the percentage ownership they have in the corporation.

Why is the Self Employment Determination Important?   From the stand point of a mortgage underwriter, self employment is important because generally the income received from self employment tends to be more variable in nature vs. a salaried individual.  Businesses may have good years, great years, so-so years, and possibly bad years and if you are the owner in that business it means your income changes as well.  This makes it much more difficult to calculate the income that can be used to qualify someone for a loan.

Two important underwriting concepts for self employed individuals include:

Two year average.  The income of a Self Employed applicant is generally derived by reviewing the business income from the personal tax returns of the individual and averaging it over the most recent two years.  For example, if one has earned $50,000 in 2010 and $70,000 in 2011—the average annual income used by an underwriter to qualify the borrower would be $60,000.  Many loan programs will not consider the income from individuals who have been self employed for less than two years. Also, declining income from year to year can be a problem in some cases.  Some exceptions may apply so consult your loan officer for details.

Net, not gross income.  One of the biggest mistakes self employed borrowers make is to think that “gross” income or revenue of the business is used to qualify an applicant for a loan.  Unfortunately this is not true.  The income used is that income which is left over after all expenses of the business are deducted with some positive adjustments for non cash related expense items such as Depreciation allowed.  This can be a problem because many self employed individuals (for good reason) deduct a large amount of expenses (sometimes personal ones as well as business) from their business income to reduce their tax liability as much as possible.

For instance, if one owns a business which grosses $2 million annually in sales but has deductions equal to $1.9 Million, the qualifying income is only $100,000 times the persons ownership percentage of the business.  Be careful with this. Generally, salary income derived from the business can be used (it may still be averaged) as long as the salary is supported by the cash flow of the business.

What documentation will a self employed borrower need to bring to their loan officer?  It can vary somewhat from borrower to borrower but in general you’ll need the following:

• Two years complete and signed personal federal tax returns.
• K1 Forms showing business income from corporations owned.
• Canceled checks for personal debt paid by the business showing the payments are made from the business account.  Generally if you have 12 months of payments made by the business these debts don’t need to be counted against your personal debt profile.
• Complete Corporate or Partnership Business tax returns for the past two years and sometimes a profit and loss statement MAY be required.

Owning your own business can be very rewarding and often lucrative.  When it comes to qualifying for a mortgage loan, however, the rules don’t always benefit you. Understanding the requirements that mortgage lenders make on self employed individuals will help you navigate the process and avoid heartache.  Experienced loan officers can review your tax returns ahead of time to determine the appropriate income that can be used to help you qualify for a loan.  It’s important to start this process early before you start looking for a new home.  The experienced loan officers at FM Lending Services can help guide you through the process.

Article contributed by Hugh Page of FM Lending. Great stuff, Hugh! Thank you.

Image courtesy of Gina Trapani on Flickr.

Newly elected Raleigh Regional Association of REALTORS® (RRAR) President, Stacey Anfindsen visited our FM Brier Creek office on February 1st. The topic of discussion – to give our Associates an overview of Triangle housing market conditions and tips on how to use the TARR Report website to assist with pricing of their listings. Over 25 people attended the 1-hour seminar which left everyone more enlightened about market conditions and more confident of about pricing their own listings to sell.

FM Brier Creek Sales Manager Eddie Brown with Stacey Anfindsen

Fonville Morisey Brier Creek thanks Stacey for taking his time to visit our office!

To see Stacey’s latest video highlighting Triangle area housing market conditions, click below.

Anything new or surprising that you learned about in the video above? Please share your thoughts below!