Mortgage Refinancing 101

Even before you’re ready to replace your current home loan with a new loan, you may be asking yourself, “Where do I start? Who should I talk to? What documents will I need?” In other words, the mortgage refinancing process may seem a bit overwhelming. The good news is there are steps to refinancing that are simple to follow. Take a look at the five steps below to begin your walk down the path to refinancing your home mortgage.

Set Your Re-fi Goals

Just like any other journey, the route to mortgage refinancing must have a destination. Some common refinancing goals include lowering your monthly payment, paying down the principal, withdrawing the equity in your home to pay off high-interest debt, and shortening the term of the loan. If you’re planning to move in five years or more, you may have other goals like re-investing the equity in smart improvements to increase your home’s resale value.

Know Your Credit Score

Having a great credit score usually translates into securing an excellent interest rate. That’s why knowing your credit score before you refinance is important. Does your credit score need some work? Take the time and effort to improve it. You may save yourself thousands of dollars over the term of your mortgage by earning a lower interest rate. A full credit report including your credit score is usually available free of charge from your bank and from many online resources.

Determine Your Home’s Equity

Before you refinance, call your lender to determine the payoff on your current mortgage. Then, have a trusted real estate agent show you a list of comparable properties (similar in size, age and updates in your neighborhood) that recently sold. Knowing the current market value of your home and subtracting what you owe on your current mortgage will help you determine the equity you have before you refinance.

Research Interest Rates

Knowing in advance the interest rates offered by various lenders will give you an advantage when you decide to refinance. Rates often differ by what seem like small amounts, but those fractions of percentage points add up over time. As well, depending on the type of loans you may qualify for, different home loan programs, such as VA, FHA, USDA and conventional offer different interest rates. Do your homework: research the best mortgage loans with the lowest rates that meet your needs.

Gather Your Money and Documents

Before applying to refinance your home mortgage, collect the necessary documents and data about your debt and assets, including income tax returns, W2s, bank statements, credit reports and personal identification. Also, be ready to pay closing costs by setting aside money in advance (about two to five percent of the appraised market value of your home).

With more than 20 years of experience helping individuals, small businesses and non-profit organizations with their finances, Donohoo Accounting Services is here to help you with your tax planning, tax filing and accounting needs. If you would like to set up a free consultation, contact us at 513-528-3982. For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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How Your Small Business Can Qualify For COVID-19 Relief

The United States Senate legislated the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), geared toward providing financial support to the American public and American businesses in light of the economic fallout from the coronavirus (COVID-19) pandemic.

A principal component of the CARES Act is the allowance of $349 billion for small businesses through federally supported loans under an amended and broadened Small Business Administration (SBA) 7(a) loan guaranty program known as the Paycheck Protection Program.

Below, the tax experts at Donohoo Accounting Services address some of the fundamental elements of the CARES Act.

Critical Aspects of the CARES Act

Eligible businesses comprise:

  • Businesses with as many as 500 employees or which meet the appropriate size standard for the industry as stipulated by SBA’s current requirements.
  • Businesses in the food services and accommodation industries that exceed one physical location but contain less than 500 employees at each location.
  • Nonprofit organizations
  • Approved sole proprietors and independent contractors.
  • Loans will be accessible across SBA and Treasury accepted banks, credit unions, and select nonbank lenders.
  • Borrowers can withdraw loans 2.5 times their monthly payroll expenses, not to exceed $10 million.

Which businesses are eligible for the Paycheck Protection Program?

Based on the wording of the bill, typically, any business active on February 15, 2020, with less than or equal to 500 employees (or that meets the appropriate size benchmark for the industry as required by SBA’s existing regulations) qualifies.

What is the maximum loan value that a business can accept through the Paycheck Protection Program?

Each business can accept the lesser of $10 million or a total of 2.5 times the average total monthly payroll expenses for the previous year.

What can a business use loans for?

Businesses can leverage funds from the Program loans to meet costs involving:

  • Payroll costs, including remuneration to employees; disbursements for vacation, family, parental sick or medical leave; payments due to termination; payments necessary for group health care benefits, retirement benefits, and local and state employment taxes
  • Interest payments concerning any mortgage obligations or additional debt obligations sustained prior to February 15, 2020 (excluding any payments or prepayments of principal)
  • Rent
  • Utilities

How does a business apply for a loan under the Paycheck Protection Program

Businesses can visit an authorized SBA 7(a) credit union, bank or lender, apply for a loan and be approved that very day. While there is no cost to apply for the loan, businesses will be charged a fixed interest rate.

What are the terms and conditions of Program loans?

The terms and conditions for a covered loan are identical to the relevant terms and conditions for conventional SBA 7(a) loans.

What documents must a lender require to provide a borrower loan forgiveness?

Documentation that confirms the number of full-time employees on payroll and pay rates for the periods designated under the reduction for loan forgiveness above. For example:

  • Payroll tax filings to the IRS, state payroll and SUTA filing
  • Financial statements corroborating payment on debt obligations sustained prior to the covered period
  • And, any additional documents the SBA may request

Ready to discover what tax credits you or your business qualify for? Call Donohoo Accounting Services today at 513-528-3982 for a FREE consultation! For more tips and our latest updates, check us out on Facebook, Twitter or LinkedIn!

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3 Tips To Save For Vacation Without Touching Your Savings

With this weather, it’s normal to find yourself occasionally daydreaming of sandy beaches and drinks with little umbrellas. It’s time to start today to make that dream a reality, without digging in to your existing savings. Follow these tips below and soon you’ll be digging your toes in the sand relaxing your cares away.

Form a Budget

If you’ve already decided where you’d like to go on vacation, when you will go, and for how long, establishing a budget is easy. You can go about forming your budget in two ways: First, research via the internet to find the best flight fares, hotel packages, transportation, restaurants and other expenses. Then plug those numbers into a vacation budget planning form that will help organize and calculate your expenses. Second, form a budget by outlining your vacation destination, travel dates and the estimated amount you’ll have to spend. Then, have a travel agent find you the best deals based on the vacation packages they have available.

Look for Ways to Save

We’re all familiar with the traditional ways of saving money for vacation, such as having a change jar or piggy bank, or opening a savings account with a local bank. Those ideas still work and may be useful in helping you save for your vacation. But in today’s world there are even better means of helping you reach your savings goal. First among the modern savings tools you can use to help you are the many smartphone apps that automatically transfer a set dollar amount – at pre-determined times – from your checking account into an account for your vacation. In addition to saving money from your paycheck each month, you can create sources of additional income by selling household items and collectibles online on sites such as eBay or Etsy or Amazon.

Also, consider what you can give up to go toward the expenses. Making coffee at home can save $20-$50 per week. Packing lunch instead of eating out during the workday can save $50-$100 per week. It won’t be easy at first, but these funds can easily make up the difference between a basic vacation and a luxury vacation.

Make Your Goal Tangible

While your spring or summer vacation may only seem like a dream until you actually leave for the trip, there are things you can do to make it tangible now. Print off some color pictures of your vacation destination and hang them up where you’ll see them daily. Additionally, you may consider purchasing a few small items that you will need for your trip, such as sandals or a bathing suit. Put these items out where you’ll see them regularly to remind you of why you’re saving.

The professionals at Donohoo Accounting Services have even more ways to help you save. Contact us today to schedule your free consultation or call 513-528-3982. And don’t forget to check us out on Facebook, Twitter and LinkedIn for our latest updates!

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Tips for Completing the FAFSA

Planning ahead is vital for a successful academic year and it’s never too early to start thinking about financial aid for next year. The 2020-21 FAFSA is available for filing beginning October 1 and getting an early start means you’ll have plenty of time to complete and submit your financial aid well before the deadline. Whether you’re a student or a parent, filling out FAFSA can be complicated and time-consuming, so it’s important to be careful in order to avoid costly mistakes. With these helpful tips, you can avoid dreading the deadline and rest easy knowing next year’s financial aid is secured.

Fill It Out Early

You may think that you have plenty of time to fill your FAFSA out, but putting off finishing it can cost you. Filling it out and submitting your FAFSA as soon as it’s available provides you with the opportunity to get the most financial aid available, as some financial aid is awarded on a first-come, first-served basis. In some instances, states and colleges run out of money early, so make sure to complete your FAFSA early to avoid being left high and dry for the next academic year.

Get A FSA ID Before Starting Your FAFSA

Your FSA ID is an important part of completing your FAFSA as it allows you to electronically sign your FAFSA and submit it and access other Department of Education websites. Each FSA ID is unique and both parents and students will need to create their own separate IDs in order to avoid any delays that may result from a mix-up.

Use the IRS Data Retrieval Tool (IRS DRT)

One of the requirements for completing your FAFSA is supplying your financial information. The IRS Data Retrieval Tool lets you avoid the difficulty of finding old tax returns or risk entering the wrong data. In a few simple clicks, you can import your tax information quickly and accurately, reducing the risk of any errors. Simply click “Link to IRS” to use it.

Carefully Review Information Before Submitting Your FAFSA

Even the simplest mistake can have a serious impact your financial aid, delaying your application or affecting the amount of financial aid you receive, so before you submit your FAFSA it’s important to make sure everything is complete. Common mistakes include leaving too many fields blank, forgetting to list the colleges you plan to attend, or misplaced commas and decimal points. Mistakes often come from failing to read or misunderstanding directions so while you’re reviewing your information make sure you’ve filled everything out according to the instructions.

Sign and Submit

Until you’ve signed and submitted your FAFSA it’s still incomplete. Once you’ve reviewed all of your information and checked or corrected and mistakes you can submit your FAFSA electronically using your FSA ID.

If you’re looking for help with questions about making sure you have everything you need for your financial aid application, contact an experienced accountant like the ones at Donohoo Accounting Services. Schedule a free consultation at 513-528-3982 or email us today. Check us out on Facebook, Twitter or LinkedIn for our latest updates!

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