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Old 02-04-2009, 04:50 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,098,953 times
Reputation: 952

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Quote:
Originally Posted by bornandraised atl View Post
We could go round and round on this....fair tax and be done with it.

as far as mortgage underwriting is concerned, 1099 wage earners - the majority - have been left with few options in the current mortgage market.
With all due respect, the question the OP posed has zero to do with the current tax code. That being said I personally (although I usually don't like to talk politics or policy) agree that the fair tax is the way to go.

Now, back to the topic at hand. From a lender's point of view, if your expenses equal your gross income then you effectively make no money. It's not that difficult to understand. I'm not saying that the original poster does not have legitimate deductions, but again from a lender's point of view $100,000 a year minus $100,000 a year equals zero. No ifs, ands, or buts about it. Zero income means zero ability to repay the mortgage equals no mortgage. 2 choices, pay more taxes or get no financing. No debate about tax code is going to change that.
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Old 02-04-2009, 05:07 PM
 
Location: Atlanta, GA
331 posts, read 623,170 times
Reputation: 104
I agree - I simply addressed the drift of the conversion to try and say that the original poster was manipulating his tax returns - My point is that the tax code allows for how he files his taxes - if it is manipulation then that is up to the IRS, not mortgage companies.

again, info for another thread.
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Old 02-05-2009, 08:50 AM
 
4,543 posts, read 11,549,619 times
Reputation: 3063
Quote:
Originally Posted by bornandraised atl View Post
I agree - I simply addressed the drift of the conversion to try and say that the original poster was manipulating his tax returns - My point is that the tax code allows for how he files his taxes - if it is manipulation then that is up to the IRS, not mortgage companies.

again, info for another thread.
and if there is not sufficeint net income claimed to support the loan then it is the mortgage lender's obligation to deny it.
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Old 02-07-2009, 07:18 PM
 
2,197 posts, read 6,593,924 times
Reputation: 1684
The problem is, most lenders are no longer willing to show flexibility and underwrite on a case-by-case basis. Many follow stringent guidelines and if you don't meet them, you're denied.

What about someone who has had a couple of bad years, but has excellent credit, a high FICO and considerable assets? What about someone who maxed out their 401k contributions, thus lowering their net in the past, but not going forward? I know someone who was recently denied an investment mortgage with 25% down, an 800+ FICO and seven figures in liquid assets because she had cut back her hours. Was she really more of a risk than the first-time homeowner with 3% down, credit card debt, only $5K in a bank account and a job at a struggling company looking at layoffs? Being vigilant is warranted, but common sense seems to have gotten lost in the panic.
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Old 02-07-2009, 09:17 PM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,098,953 times
Reputation: 952
Quote:
Originally Posted by goodbyehollywood View Post
The problem is, most lenders are no longer willing to show flexibility and underwrite on a case-by-case basis. Many follow stringent guidelines and if you don't meet them, you're denied.

What about someone who has had a couple of bad years, but has excellent credit, a high FICO and considerable assets? What about someone who maxed out their 401k contributions, thus lowering their net in the past, but not going forward? I know someone who was recently denied an investment mortgage with 25% down, an 800+ FICO and seven figures in liquid assets because she had cut back her hours. Was she really more of a risk than the first-time homeowner with 3% down, credit card debt, only $5K in a bank account and a job at a struggling company looking at layoffs? Being vigilant is warranted, but common sense seems to have gotten lost in the panic.
I agree 100%.
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Old 02-14-2009, 11:48 PM
 
739 posts, read 2,695,759 times
Reputation: 308
I am in the same boat. I own two companies. One an established consulting company and one a startup company. The startup company has had net loss for the past two years because, well, we are a startup in R&D mode. We have yet to release our product and have been developing it for two years. Because I was sole share holder in 2007, the net loss was put on schedule c and deducted out of my personal income. I got the tax money I paid to the government back, but was unable to qualify for a loan. In 2008, I had investors so the loss is passed as a deduction through schedule k. This was much better for my own personal net income on paper. My wife and I also have an averaged credit score of 750.

So, because I only have one "good" year of tax returns, I had to get a cosigner. We asked family. This is probably what you will have to do. At first they said no. Then I propositioned it in a new way. For use of their name and income history, we would give then a 10% equity stake in the property if/when we do sell or rent it. That for some reason seemed to change their mind so that is another option you can use if they no.

Good luck getting approved- it aint going to happen on your own. You are probably going to have to get a cosigner.
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Old 02-15-2009, 11:13 AM
 
25,833 posts, read 49,727,953 times
Reputation: 19291
Quote:
Originally Posted by goodbyehollywood View Post
The problem is, most lenders are no longer willing to show flexibility and underwrite on a case-by-case basis. Many follow stringent guidelines and if you don't meet them, you're denied.

What about someone who has had a couple of bad years, but has excellent credit, a high FICO and considerable assets? What about someone who maxed out their 401k contributions, thus lowering their net in the past, but not going forward? I know someone who was recently denied an investment mortgage with 25% down, an 800+ FICO and seven figures in liquid assets because she had cut back her hours. Was she really more of a risk than the first-time homeowner with 3% down, credit card debt, only $5K in a bank account and a job at a struggling company looking at layoffs? Being vigilant is warranted, but common sense seems to have gotten lost in the panic.
Ran into this a lot... My deductions, the bulk from depreciation on Rental Property and maximizing 401k contributions substantially reduce my taxable income... I've never had debt other than First Deed of Trusts on Rental Properties... my home is paid for.

For a long time, it was just about impossible for me to qualify for any good loan program... even with credit scores over 800

I was turned down on my last property purchase by Well Fargo and a Mortgage Broker late into the buying process... mortgage broker said I didn't quality for a 30 year fixed and Wells Fargo said the home had too much land???... well, WF knew how much land the home had since day one

Said screw it!... wrote a check and paid cash for it.

I have little sympathy for Lenders that have created this crisis... lots of financially responsible people get turned down while lenders fall all over themselves to market loans that no fiscally responsible person would want.

Have you tried a Credit Union? I've found credit unions and small community banks much better than any of the Nationals.

Ironically, Wells Fargo contacted me about a year after they turned me down saying I was pre-approved for a HELOC with them... ya, right...
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Old 01-26-2010, 01:36 PM
 
1 posts, read 1,165 times
Reputation: 10
I am having the same problems. I am self employed. My tax preparer said that by taking the $10,000 standard deduction, that it would help reduce my tax. She apparently didn't know what she was talking about. When I went for a home loan, they said that because of the tax credit that I took, that it made it look like I earned $10,000 less than I actually earned. I kept all my reciepts through the year, and the tax lady said that if my reciepts didn't add up to be $10,000 or more, than I would take the standard deduction, which was the standard $10,000 deduction.

Last edited by christy0917; 01-26-2010 at 01:46 PM..
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Old 01-27-2010, 09:40 PM
 
364 posts, read 804,093 times
Reputation: 117
I feel for the OP as I am also self-employed and know how tough it can be to get a loan, be it for business or otherwise. However, I am fully on board with what TimtheGuy has stated. If you claim zero or very little personal income on your tax return but you continue to accumulate money in the bank, something doesn't check out. If you earn / pay yourself $50,000 per year and then claim $50,000 in expenses but still are adding money to your personal checking account, you either understated your income or overstated your expenses. There is no other explanation.

I was literally in tears in my second year of being self-employed due to the amount of taxes I had to pay to the IRS due to the disparity in my income versus expenses. However, I will be able to invest in a home because of it.
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