We just tried to talk to our credit union about getting a mortgage. They won't even start the paperwork or look at any of my documentation because I have only been self employed for a year. I have enough cash on hand to pay for 50% of the house outright, but they won't even let me show them. I've had a good income stream for years but apparently that doesn't matter because I've only been on my own for a year.
Anyone else had to jump through these hoops?
I'm in the same boat. Self employed for a year. We just bought a house but had to jump through some hoops. Try talking to a mortgage company?
Find another lender.
Unfortunately, it's pretty common with being self-employed. They know from experience that some have had really good years, followed by really poor years. The only thing I'd recommend is seeing if you can find a bank who focuses on working with individuals who are self-employed. If you're in a type of trade group, they may have a good bank contact to share. Good luck, I know it can be frustrating!
I just called BoA. We'll see what they say, the guy is going to do some research to see just how rigid they are on the self employment rules.
The house is owned by my in-laws. We could ask them if they want to self-finance it, but I'd rather not. We've been renting it from them for years. If we just took over the house completely (taxes, insurance, maintenance) and kept the payment the same we could have it paid off in less than 12 years.
I'm in the process of going through this now... depending on the in-laws' future plans for the house, it may be worth it to them to talk to a financial advisor. There may be tax benefits for various options.
Ian F wrote: I'm in the process of going through this now... depending on the in-laws' future plans for the house, it may be worth it to them to talk to a financial advisor. There may be tax benefits for various options.
Very interesting. I know they are looking to unload their main house so they can move to their rental beach house full time. My FIL's retirement payout is lousy, and my MIL doesn't qualify for Social Security since she was a stay at home Mom. This could be a way to guarantee her an income for at least a decade in case something happens to my FIL. When my FIL passes, my MIL doesn't get squat, which stinks.
It looks like the tax benefits may be good for them as well. Thanks for the tip!
In a nutshell, if the long-term plan is for the house to go to you (specifically your wife), then it may not make sense for them to sell it to you only to pass it down some years later. Not only may they get taxes on the income of the house sale (especially if it's a second or third house), the estate may get taxed on the house again when it is inherited. But again, I'm no pro - talk to one. In my case as an only child, it's pretty simple. It is probably more complicated if siblings are involved.
I was with the same bank for 25 years, had good credit and was self-employed.
Tried to get a mortgage, they pretty much told me to F.O.
I called a mortgage broker, no problems, have house now.
I dropped that bank like a hot rock. They couldn't understand why I was leaving for the credit union that gave me my mortgage.
If you want to get a Fannie/Freddie/FHA etc. mortgage, 2 years is common/required. Some banks do portfolio loans (they are not sold off to Fannie/Freddie etc.)--they will likely be an ARM, but may have looser guidelines.
There used to be non-conforming loans where they would do bank statements (deposits for 12 months) as documentation of income. Maybe something like that still exists. Of course there used to be "stated" programs--but those went away by about 2007 or so.
If you really have a 50% down, the bank is cutting its own throat by turning you away.
Unless you are buying a house such that the remaining 50% is way out of your income/debt range, there is really no way they could lose on the deal. I call that the drug dealer buy: You have $500,000k down on a $1,000,000 home and a stated income of $75,000 or less. Not going to happen.
2 years tax returns for self-employed people has been an industry standard for decades.
The people at bank branches aren't going to try to make an odd situation work. The mortgage broker types try a bit harder (but typically charge more).
Maybe try someone who does manual underwriting?
SVreX wrote: 2 years tax returns for self-employed people has been an industry standard for decades.
Yep, even when I was still married and we refinanced even though my income would cover the payment alone, for her to be on they wanted 2 years of returns.
slefain wrote: My FIL's retirement payout is lousy, and my MIL doesn't qualify for Social Security since she was a stay at home Mom.
Wrong! If your FIL can draw SS so can your MIL as long as she is age eligible. Occupation or lack thereof has nothing to do with it. I have two SIL's who never worked for pay a day in their life. They are drawing based on their husband's SS. They don't get much but, it is something.
Incorporate, then pay yourself as an employee. I don't know if it would work, but I do know your staff, if you have any, would be far more appealing than you to the lenders of the world.
Hal wrote:slefain wrote: My FIL's retirement payout is lousy, and my MIL doesn't qualify for Social Security since she was a stay at home Mom.Wrong! If your FIL can draw SS so can your MIL as long as she is age eligible. Occupation or lack thereof has nothing to do with it. I have two SIL's who never worked for pay a day in their life. They are drawing based on their husband's SS. They don't get much but, it is something.
This. One of the broken things about the system is that anyone married to a beneficiary for ten years can draw on the spouse's file, even if they are divorced. Potentially several ex's can draw on one person's file, even though they never contributed.
Basil Exposition wrote:Hal wrote:This. One of the broken things about the system is that anyone married to a beneficiary for ten years can draw on the spouse's file, even if they are divorced. Potentially several ex's can draw on one person's file, even though they never contributed.slefain wrote: My FIL's retirement payout is lousy, and my MIL doesn't qualify for Social Security since she was a stay at home Mom.Wrong! If your FIL can draw SS so can your MIL as long as she is age eligible. Occupation or lack thereof has nothing to do with it. I have two SIL's who never worked for pay a day in their life. They are drawing based on their husband's SS. They don't get much but, it is something.
Never said my FIL had Social Security. He got screwed by the school system which has its own retirement deal here in Dekalb County (Georgia). Decades ago Dekalb schools managed to get itself exempted from SS and instead has its own retirement fund. His retirement benefit pays to him and him only. They offer a spousal benefit payment but it cuts the overall amount WAY down, pretty much unlivable income. So they took the bigger amount and are hoping he lives a long time. He's in good health so it is a good gamble. He hits the gym 3x a week and hikes miles at a time. For almost 70 he's in stellar shape.
In reply to slefain:
I think this was common for govt agencies back then. My mother has a similar retirement plan from the Fed Govt. Some years ago, they changed to a more modern 401k set-up, which is required now. She had the option of changing, but chose to stay with the pension plan. She's glad she did as she's fairly certain she'd still be working if she had (retired about 2 years ago at 64).
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