Self Employed Mortgage - Questionss
Hello all,I have a situation that I would like to hear opinions on because I'm hearing different things from different people. I am a technical writer who has been working for/"with" the same company for 4 years. Exactly two years ago in early June 2009 I was "fired." I signed a release and some other stuff. I was then immediately "rehired" as a contractor. I'd rather not get into the legal mumbo jumbo about whether or not I am still an employee of theirs. I only included this part of the story in case it might be somehow relevant. My accountant guided me through the process of naming my business, selecting the ID code, all of that. Now, since June 2009 here's how my tax returns look: * in 2009 my total self employed net profit, as reported on my schedule C, was $24,321 * in 2010, my total self employed net profit, as reported on my schedule C, was $57,631 * In 2011 thus far, I am on track to earn roughly the same that I did in 2010 * The company 1099's me for the full amount listed under my gross receiptsSo that's my situation. My question is this: how does an underwriter take the above and determine what I am eligible for? It was suggested to me that I should wait until I file 2011's taxes, thus showing two full years of what my real self employment income is, before going for a mortgage again. Thanks for any and all replies, by wellst_751_785 from Corinth, Maine. Sep 20th 2011
Brendan Fontaine (brendan.fontaine)
#2 ranked lender in Maine - 89 contributions
This is a very common source of confusion for Mainer's due to the fact that we have such a large population of 1099'd SE contractors and unfortunately the lenders do not make it easy for the SE to qualify for loans as they once did. The bottom line is that after 2 years of filing SE tax returns a lender will qualify you based on your Adjusted Gross Income and allow you a few adbacks such as depreciation. Be careful about claiming UNREIMBURSED Business Expenses! They can be one of many death nails in your loan!
Bryan Wilson (Bryan Wilson)
#149 ranked lender in California - 30 contributions
I agree with what was posted earlier. You need two year's filed returns so lender can average for income,
Joe Metzler (JoeMetzler)
#17 ranked lender in Minnesota - 4,843 contributions
Generally speaking, the basic rule is that anyone self-employed, commissions, tipped income, 1099, etc needs to provide two years of Federal tax returns. Lenders will take that, and determine your adjusted income for lender purposes. Note that is isn't necessarily that same number that you show on your tax return as adjusted income. Next, while two years is the basic rule, a few people can get approved with as little as 6 months of self-employed income. Contact a local licensed mortgage loan officer for professional review, and visit http://joemetzler.com/self_employed_homebuyers.htm for more information
Chasity Graff (Chasity)
#9 ranked lender in Louisiana - 29 contributions
There are lenders (few but they're out there) that will consider your 2010 with a p&l for 2011 to determine your income. The fact that you've been self employed for 2 years provides the lender with some security that your income has the ability to increase over time (decreasing income can be a problem). I know 5th/3rd Bank has that option here in Louisiana - you may want to check with them in your area if you don't want to wait for your 2011 taxes to be filed. I would talk them through the scenario first before they pull a credit report and take an application to see if it's something they could work with. Good Luck!
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