A cautious view to housing

There is plenty of housing news to fill our coffers and there will be for some time. What is going on in the housing industry right now isn’t going away, at least until the market corrects itself, according to many of my sources.

But you would be surprised how much our area is insulated from many of the problems associated with the market, though we are believed to see indirect effects from the credit and mortgage crunch by the way of decreased spending and falling home values. Jim Gaines’ article in the Daily News shows local leaders already anticipate problems and hope to get people help before they get into foreclosure.

The indirect effects still don’t stop local builders and Realtors from telling me it’s the “best time to buy a house.” I guess you can say that regardless of what the circumstances really are, folks, but I’m a skeptic, especially when I think about how much our local market is saturated with inventory.

I truly wonder to what extent people feel “stuck” with a home, instead of actually “living” in it.

Though our region isn’t seeing the over-inflated price increases found in areas like Florida, California and elsewhere, the fact that your credit score has to be 600 or better these days to buy a car, home or otherwise, sends a message to consumers.

Talking with Don Spry, a branch manager of Bowling Green’s office of Reserve Mortgage Investments, the mortgage crisis also creates issues for those who are self-employed he said.

For instance, truck drivers who are self-employed make great money, but more often than not, Spry said some write off so many expenses that they can’t prove that they’re making the money to refinance their home.

Such 1099-holders as they are called fall into the trap because lenders are looking at their adjusted gross income when its refinance time.

A truck driver may make $100,000 in income, but write off $80,000 in expenses, Spry said, exploiting schedule C of the tax filing, showing an adjusted gross income of $20,000.

As a result, the ratios used to determine affordability make it difficult for lenders to refinance when the numbers show the person can’t really be in a home.

“There’s no income there, they’re making good money, but they’re not claming it,” Spry said.

Spry said he tells a lot of people in those situation to file taxes for two years to show their income, show exactly what they make and not exploit their expenses.

“A lot of self-employed people just won’t do it,” he contends, adding that “a lot of them know they have the income but don’t want to pay the taxes.”


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