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Old 11-17-2012, 05:20 PM
 
983 posts, read 1,061,568 times
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Quote:
Originally Posted by HappyNewMe View Post
Can anybody tell me, please, what documents as a proof are usually required for self-employed income? I heard of two years tax return (obviously), but nothing else. I never had to file it before - this year would be the first as self-employed, so I don't even know about what forms will be used to file, etc. (the abovementioned "schedule C" or anything else). But, perhaps, it might be actually better to ask and know ahead of the time?
My hope/plan is that with this 2012 and after 2013 return to qualify for a mortgage. But I want to also make sure to get ALL the paperwork needed (if I can help it), before then.

Bank statements, perhaps? If so - for all of the 2 years, 1 year, 6 months? Itemized anything? I don't think I can get a contract to show and don't have business expenses to speak of.
Also, do they only take into account taxable income after all deductions (dependants), etc.? Because that would lower it quite a bit. Or, should I not even claim any dependants this year (if that is even OK to do)?

I also have other income - but that one is easy.
Have another mortgage (unless I sell by then) with 25% equity - collateral?
NO other debt and good credit (750). Aiming for 20% down, FHA or conventional.

PLEASE
You will need to provide your last 2-3 yrs tax returns so that the lender can see exactly how much 'self employment' income you actually have.

They will also want at least a couple years of you in the same business ( ie: not jumping from landscaping business owner to painting contractor )
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Old 11-17-2012, 05:58 PM
 
Location: MID ATLANTIC
8,422 posts, read 21,689,644 times
Reputation: 9947
Quote:
Originally Posted by HappyNewMe View Post
Can anybody tell me, please, what documents as a proof are usually required for self-employed income? I heard of two years tax return (obviously), but nothing else. I never had to file it before - this year would be the first as self-employed, so I don't even know about what forms will be used to file, etc. (the abovementioned "schedule C" or anything else). But, perhaps, it might be actually better to ask and know ahead of the time?
My hope/plan is that with this 2012 and after 2013 return to qualify for a mortgage. But I want to also make sure to get ALL the paperwork needed (if I can help it), before then.

Bank statements, perhaps? If so - for all of the 2 years, 1 year, 6 months? Itemized anything? I don't think I can get a contract to show and don't have business expenses to speak of.
Also, do they only take into account taxable income after all deductions (dependants), etc.? Because that would lower it quite a bit. Or, should I not even claim any dependants this year (if that is even OK to do)?

I also have other income - but that one is easy.
Have another mortgage (unless I sell by then) with 25% equity - collateral?
NO other debt and good credit (750). Aiming for 20% down, FHA or conventional.

PLEASE
Supporting documentation has a shelf life. Here's a checklist (cut and paste) I send out to every buyer, that covers the bulk of requirements. If there's other income in there, such as rental, it will be on Schedule E. So, for the self employed buyer, we need the complete tax return, as well as, any 1120s or 1065 returns. The personal returns would contain any schedules needed. Most underwriters will ask for a year-to-date P&L. This can be self-prepared and unaudited. It's basically income/expenses to make sure income used is in line.

The lender doesn't examine the business bank statements (unless funds are being used from the business account, then an accountant must render a decision if pulling money from the business will have an adverse effect).

As for that total list to be prepared to bring:

· Photo ID, if not a US Citizen, a copy of your Green Card and Social Security card will be needed.
· Most recent 2 years W2’s or 1099’s.
· Copies of award letters (retirement, SSDI)
· We will need evidence the earnest money has cleared. I will be asking your agent for a copy of the check, but I will need a print out of your account when the check clears.
· It is important that I have a complete ratified copy of your contract, I will contact your agent or builder. Everything I do revolves around the contract terms.
· Federal Income Tax Returns: If you are self-employed or over 25% of your compensation is commission, we will need your two most recent Federa returns, Corporate, Partnership or LLC returns. If you own an investment property, we will need copies of your two most recent Federal returns.
· Copies of all mortgage statements and HOA coupons/statements
· Most recent two years tax returns if you own an existing rental property
· Copy of any sales contracts if you are selling a home, if not sold, copy of the listing.
· 1 months paystubs
· If you are receiving child support/alimony, we will need a copy of the divorce decree and the PSA. If we are using that income, I will need to document it has been received for 1 year. If you receive this through the State, you can provide us with a print out from the Family Services website.
· Most recent bank 2 months bank statements (all pages).
· IRA’s, CDs, 401K, and TSP – we will need 2 months statements or most recent quarterly statement. If you are using retirement accounts as assets for “reserves,” we will need documentation showing you have access to these funds in the event of a hardship.
Of course, not all will apply, just as everything needed may not be on that list. (I didn't have the VA items, nor the prior BK or FC docs needed). Mortgage loan documentation is just as individual as the people that obtain them.

Last edited by SmartMoney; 11-17-2012 at 06:24 PM..
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Old 11-17-2012, 11:58 PM
 
Location: Anchorage
837 posts, read 1,689,766 times
Reputation: 886
That was very thorough, thanks!





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