Q & A with Dottie Herman

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Q1 - I am a self-employed business owner.  What income documents do I need to show an Underwriter?

A - Usually, your last 2 years of W-2's if you're an "S" or a "C" corp, along with your business (corporate) and personal tax returns for the last 2 years.  If you are a schedule "C" self-employed, then the last 2 years of your personal tax returns should suffice.  If we're past April 30th, which we now are, the UW would need a YTD Profit and Loss statement from the self-employed' s accountant.

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Q2 - What is the highest credit score a person can have?  What is the lowest credit score a lender will accept?

A - The highest credit score a person can have is 850.  Normally, the lowest credit score a lender will accept is 620 for a conventional loan, and 600 for an FHA loan, depending on the lender. 

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Q3 - I have four years left on my mortgage, but I am having trouble now making the payments. Is there anything I can do? Does it pay to try and refinance?

A - With only four years left on your mortgage, you are almost at the end of your term, which means that you are mostly paying principal and very little interest.  If you qualify, you may want to think about refinancing for a longer term, to alleviate the current pressure you're having with your current payment.  This will add more years to your term, and additional short term and long term costs, but at least you will be able to handle the payments and stay in the home. Alternatively, you could try to negotiate with your current mortgage holder based upon a hardship.

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Q4 - I need to do some home improvements but I don't have the liquid money. What are some of my options as far as loans or second mortgages?

A - If you have enough equity in your home, you can apply for a cash-out refinance of your first mortgage.  The most a lender will generally lend you, if you qualify, is 75% of the value of your home for a conventional mortgage, and 85% of the home's value for an FHA mortgage.  You can also try for a second mortgage, or Home Equity Line of Credit, but the most a lender will generally lend you is 65% of the value of your home, including the first mortgage.

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If you have a real estate question for Dottie, please send it to; Reporters@WorldPropertyChannel.com

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