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Old 07-10-2018, 08:52 PM
 
56 posts, read 26,818 times
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I am currently a full time employee for the past 2 years. I am planning to leave this job and take up consulting job that pays better. Also, I am planning to buy a house in year or so in a different state (after we move).

Should I anticipate any hurdles getting the mortgage?
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Old 07-11-2018, 05:50 AM
 
Location: MID ATLANTIC
8,139 posts, read 19,989,830 times
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You will only have problems if you are going from a W2 position to a 1099 position. If you are going from W2 to W2, same or similar line of work, you should be fine.
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Old 07-11-2018, 07:33 AM
 
56 posts, read 26,818 times
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Originally Posted by SmartMoney View Post
You will only have problems if you are going from a W2 position to a 1099 position. If you are going from W2 to W2, same or similar line of work, you should be fine.
Hmm... I am going to be doing Corp-to-Corp. Would that still affect?
What kind of issues I can anticipate?

With all other things in order 20% down, Great FICO, Steady employment, etc.
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Old 07-11-2018, 08:12 AM
 
Location: Bloomington IN
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If you're going to receive anything but a W2, yes, you will have issues given your timeline. With a corp-to-corp you are establishing a business. Lenders will want to see your corporate returns and other corp financial documents going back for at least 2-3 years. You won't be able to provide that for a new corp. My husband has been a consultant for 25 plus years with his business. He's had to produce documents from his accountant, bank statements for the business, tax returns for the business, etc., etc., etc. in addition to personal returns and documents.

While you may consider your employment steady, lenders will not view it this way. They will view this as a new business venture. You will either have to wait longer than a year or take a W2 position for a year or so.
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Old 07-11-2018, 11:58 AM
 
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I wonder paying myself as W2 from my own S Corp, does not count? I would like to get a mortgage with my income and not Corp income. Is that doable?
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Old 07-11-2018, 12:33 PM
 
Location: Bloomington IN
7,220 posts, read 8,850,870 times
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Quote:
Originally Posted by kishan_the_finder View Post
I wonder paying myself as W2 from my own S Corp, does not count? I would like to get a mortgage with my income and not Corp income. Is that doable?
My husband's business is incorporated. I don't recall if the business is a C corp or an S corp. He pays himself from the company and gives himself a W2 and bonuses. When we've financed and refinanced in the past, at least 90% of the time he's had to provide corporate information also. We've used big banks, mortgage brokers, small regional banks and a credit union. The easiest re-fi was with our credit union.

I'm sorry, but in my experiences over 25 years, most recently about 2 years ago it's not as easy as just issuing yourself a W2. In addition to a business profit/loss statement (a 1099), lenders may want to see at least 2 years of business income. I did read that the two year guideline may have been reduced to 12 months under certain circumstances.

Also some unsolicited advice as our family has depended upon consultant income for 25 plus years. Save up 6-12 months worth of expenses before you even think about a mortgage. Even with a contract or work order in hand, the work can go away without notice. Case in point: I also work as a contractor. Last year I had a work order that expired on December 31 with a large, multinational firm. When the new fiscal year began in September I was waiting for the next project. The company decided they needed to cut budgets in some areas. Even with my work order I was cut at the end of September because I wasn't staffed at the time. It had nothing to do with quality and everything to do with budget cuts. Luckily I had spent the summer doing an additional side project for another company so didn't need the monthly income, but it still hurt.
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Old 07-11-2018, 01:23 PM
 
56 posts, read 26,818 times
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Thank you. Yes, I have 20%+ saved for down payment AND 6 months expenses. The next 10 months are so income is going to be on top of that. Probably next year this time, I would like to buy a home.

Follow up questions: If I remain as a W2, but change job after 8 months, would that be a problem?
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Old 07-11-2018, 07:34 PM
 
Location: MID ATLANTIC
8,139 posts, read 19,989,830 times
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You won't be able to hide it. Your corp K1s will be smack in the middle of your personal tax returns. Nice try, but it will come out as a business without a track record. You could have 50% down and it would still be a problem.
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Old 07-11-2018, 07:42 PM
 
56 posts, read 26,818 times
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Originally Posted by SmartMoney View Post
You won't be able to hide it. Your corp K1s will be smack in the middle of your personal tax returns. Nice try, but it will come out as a business without a track record. You could have 50% down and it would still be a problem.
No, not really hiding.. But trying to understand how that works.
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