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23 October 2018, 02:45 AM | #1 |
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Self Employed Mortgage Question
Hey , you self employed guys and gals, I am having a really hard time getting a mortgage being self employed for the past 3 years, have any of you done the bank statement style mortgages instead of tax return applications?
I really barely have any personal bills so I don'r really pay myself too often and I can't see get the crap taxed out of me just to show more income. Kind of a unique problem but I am sure after 2008 there are other business owners who have ran across this issue steve |
23 October 2018, 03:29 AM | #2 |
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Oh Lord, I messed with this crap. I've been forced to Rent the past 2 years, which was higher than my previous mortgage. What a ridiculous system. Good luck finding a bank statement style company. I don't have any advice other than see what you can do BEFORE you sell your home if you're in one. I learned it all the hard way.
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23 October 2018, 03:32 AM | #3 | |
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23 October 2018, 03:32 AM | #4 |
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if you dont pay yourself you have no income technically. Maybe the business could buy the house if the money is "in the business" still?
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23 October 2018, 03:33 AM | #5 | |
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23 October 2018, 03:37 AM | #6 |
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I am self employed and in the real estate industry. You are going to have to find a good mortgage broker who works with self employed people to really help you out on this one. Some paper loss items on your tax return can be added back in to help boost your income for the loan.
There are other programs out there for self employed people as well, such as bank statement loans where they take 12 months of bank statements add up the deposits and divide by 12 to come up with your monthly income. Your credit must be very high for this type of loan and typically you need 25-30% down and the interest rate is a little higher but at least you will get a mortgage. Feel free to message me if you need any more help |
23 October 2018, 03:40 AM | #7 | |
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23 October 2018, 03:42 AM | #8 | |
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23 October 2018, 04:08 AM | #9 |
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I used washington federal, but it's been about 4 years. It was a very detailed process but they got it done relatively fast. I had been self employed for only a year and a half at the time.
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23 October 2018, 04:19 AM | #10 |
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23 October 2018, 05:05 AM | #11 |
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Well, kinda the same here. Business owners aren't worth much.
Luckily I'm past that stage, being self employed since 2003, and shown proper salaries to my self, and having had A LOT of debt, that I managed to pay off well. We don't have a credit score per se, but mine would be pretty high.
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23 October 2018, 05:50 AM | #12 |
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Maybe I'm crazy but wouldn't you want to pay yourself from the business... Show a salary etc.
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23 October 2018, 06:24 AM | #13 |
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I have been self enployed since 1989 and have no dept, a good income and the banks ask me now and then if I will loan some money.
Nope is my answer, I don't need your money and I feel good to be free. Maybe I'm dumb that will die without depts, but I sleep very well.
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23 October 2018, 06:30 AM | #14 |
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I’d say you are smart.
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23 October 2018, 06:30 AM | #15 | |
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Also when you are a business owner alot of your personal bills become business bills, like my car, I don't use it at all for personal use, thats like 12K a year alone. I only pay myself what I need, the rest sits or gets reinvested in the company to grow steve |
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23 October 2018, 07:06 AM | #16 | |
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23 October 2018, 07:44 AM | #17 |
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I do pay myself a salary, pretty much on par with my old one
steve |
23 October 2018, 08:18 AM | #18 |
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Starting to dip my toes in the water on this as well - looking around to see what's out there for asset based lenders as an option.
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23 October 2018, 08:23 AM | #19 | |
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23 October 2018, 08:24 AM | #20 |
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completely untrue. unless he owns a c corp which would be unlikely. in the us flow through entities have ascribed income to the owner whether distributed or not.
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23 October 2018, 08:25 AM | #21 | |
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Under Trump's plan though there may be a tax advantage though in becoming a C-Corp and paying yourself and then declaring dividends. However, you'd have to ask an accountant, it's a fairly new area. |
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23 October 2018, 08:26 AM | #22 |
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you want to pay yourself as little of a salary as possible and take advantage of perks as well as distributions. payroll taxes are no fun.
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23 October 2018, 08:27 AM | #23 | |
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23 October 2018, 08:29 AM | #24 |
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yes I elect s corp-all pass through, draw is tricky though with s corp election and the books have to be on the level
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23 October 2018, 08:40 AM | #25 |
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You almost always want to minimize salary to the point where it is the "lowest reasonable", even in C-Corp. One of the jobs I was applying for was 20% salary and 80% dividends.
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23 October 2018, 08:44 AM | #26 |
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S-corp draw was tricky. I learned that last semester. This semester I learned that the prompt and demands of a project aren't trivial and aren't always given...
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23 October 2018, 08:45 AM | #27 |
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Glad I’m not crazy!
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23 October 2018, 08:46 AM | #28 |
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You can add take institutional funding to that. Most VCs will only invest in a C-Corp to protect their tax status, and will need a company to capture gains out of an LLC. Overall not a lever I want to negotiate. I agree that a C-corp is a PITA but I think under the new tax laws there are reasons for a C-Corp, like you can a low business tax rate, pay yourself minimum reasonable salary and be in a low tax bracket, then dividend the rest at 15-20% without self-employment tax and end up with a total effective rate lower than an LLC. I am not 100% sure though and I've been told no one is 100% sure yet.
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23 October 2018, 08:50 AM | #29 | |
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the point is simple though to the op. if you are self employed provide your tax returns. if you have limited history it will hamper your interest rates. self employed people are more risky to a lender. if he provided the facts to me i could opine as to why he is getting rejected.
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23 October 2018, 08:55 AM | #30 | |
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I've heard of revenue based lending. I have no experience with it though. |
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