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Old 03-21-2010, 12:03 AM
 
375 posts, read 837,181 times
Reputation: 439

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Hi there

Any suggestions for getting a loan would be appreciated. here's the basic deal:

* Self employed (same field) = mix of 1099's and W 2's from companies I work for. Self employed for 3 years
* Own house I rent out that I am under water on (take loss of 250/mo)
* 2 credit cards - owe 10k
* no other loans/debt (other than the rental house)
* Not sure of credit score - prob in range of 680

I want to be able to buy a house I can live in and afford. Will NOT move back to house I rent out for personal reasons.

What suggestions would you have for buying a house? I do have $$ saved towards a down payment, and was thinking my best option was to look for an owner finance.

Should I wait until cc's are paid off? I make 50k a year and expect to hit 60k this year.

No chance of co signer on loan

Would appreciate any suggestions. Thanks!
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Old 03-21-2010, 09:00 PM
 
3,578 posts, read 6,325,121 times
Reputation: 1433
You need to afford both mortgages (ur rental plus ur new home) with your current income.

You need to determine that first on your 50-60k income.

Lenders won't look kindly if you don't have at least 30 equity in your rental home and they won't count rental income.
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Old 03-22-2010, 12:45 AM
 
375 posts, read 837,181 times
Reputation: 439
Darn it! Even if I've been renting out that house for going on 4 years now?

Guess it's back to looking for an owner finance...
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Old 03-22-2010, 08:06 AM
 
Location: MID ATLANTIC
8,207 posts, read 20,387,588 times
Reputation: 9477
The buy and bail (rental income not used in qualifying) only applies to current owner occupied properties. The definition of a seasoned "landlord" is someone filing two complete tax years as a rental on Schedule E. If this is the case, your rental income will most certainly be considered.

As for your income......assuming it's all the same kind of work.....the W2s and 1099's can be all mixed in together, but an average will be taken for 2008 and 2009, using your net income filed with the IRS....so if you have writeoffs on schedule C or unreimbursed employment expenses on those come off the total......So, add up W2 incomes, the bottom line of what is reported on Schedule C, and then deduct any of those unreimbursed employment expenses.......add up all for 2008 and 2009 and divide by 24 for your monthly income (or 2 for annual income). There are some add-backs, but they are usually minor.

As for the rental property........take the net income at the bottom of Schedule E for each of the two most recent years.......add back the depreciation you declared (for two years) and divide by 24. That is going to be the monthly negative the lender counts against you.....not the current $250 deficit you have now. If the number is positive, it's income. The mortgage is not counted as a debt.

You will want to make sure your taxes are filed electronically. Your lender will need to be able to pull transcripts of 2009 returns, and that takes approximately 3 weeks if taxes are filed electronically and months if filed by hand. Your being self employed makes the transcripts necessary.

The big question is what kind of loan you have on the rental. FHA allows only one maximum LTV loan at a time to any one individual.
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