Starting February 1, 2022, two of the largest COVID-19 loan restrictions have finally been loosened by Fannie Mae and Freddie Mac. The mortgage giants rescinded the rules put in place back in June 2020 that required self-employed borrowers to provide a year-to-date profit and loss statement that reported revenue, expenses, net income, as well as a few months of their most recent bank statements.
If the self-employed borrower’s year-to-date income wasn’t roughly the same as the previous years, they could not qualify for a loan. These restrictions were put in place to show how a business was faring during the pandemic; however, this snapshot didn’t take into consideration the seasonality of a business or if they received any funds from the Payment Protection Plan.
This rule cost a lot of self-employed borrows the opportunity of locking in some of the lowest interest rates on record. While interest rates are higher than they were a year ago, they are still considered low by industry standards. Now is a great time for self employed borrowers who were previously denied or had to get a higher interest rate through an exotic loan option, to try again.
Please feel free to reach out to Dawn Schweiker or your Re/Max Associated Realtor for more information.