Buying a home

[luis27501]

So that I understand you completely, you're saying that lenders only look at the Adjusted Gross Income on my tax return to determine if I make enough to repay a loan, if I'm self-employed?

When you are self employed, yes they only look at AGI for a minimum of 2yrs. So you will need 2yrs taxes being self employed to proof income.

I am sure everyone has gotten a loan before becoming O/O, when we worked for an employer, they takes taxes out of paychecks. Which at the end of the yr most of us gotten a nice refund if we had dependents to claim, your AGI was not decline with the dependents claimed this means, standard deductions at tax season compared to the itemize deductions we take for being self employed, which makes it harder for lenders to figure out how much income you will bring in and if able to afford the loan.

My best advice hire an accountant get (incorperated). Ones incorporated pay you a set amount minus federal income, state, social security, and medicare taxes. Of course the taxes witheld will have to be reported under your business and mail in with the proper forms and payment to the right agencies that process those taxes. Now since you are no longer consider a self employed when you do this at the end of the yr you will file your individual taxes seperated from your business. Which mean you will have to file a W2 for your self and all 1099 for your business. But also consider this doing this way your business will take all the deductions which in most case is fuel, tolls, etc.

Note being an employee of your own company will make it much easier to get a loan, compare to being self employed. Lenders like to know peoples weakly, montly, or yearly income and they like to see it on paper.

Hire a good accountant and you wont have any problems getting loans since there job is to maximize your AGI and reduce your tax liability at the end of the year

 

[tumbleweeds]

If you would like to live on a lake in Missouri, there is a mobile home for sale on Lake of the Ozarks for $5,000 and another for $9,000. The water is just a few feet away. It's just out side of Stover.

Pay cash, live like no one else, so some day you can live like no one else.

Not a lot of culture, but lots of fish to catch.

 

[usafk9]

When you are self employed, yes they only look at AGI for a minimum of 2yrs.

Wrong.

Getting an accountant is a good idea; I agree. However, asking one to help you "maximize AGI" is foolish.

Whomever told you that seeing $30k as an AGI as a go/no-go for considering a loan is a complete moron.

My gut tells me that you've gotten some of this advice from a broker or banker that was too lazy to actually earn their yield spread premium.

 

[luis27501]

Wrong.

Getting an accountant is a good idea; I agree. However, asking one to help you "maximize AGI" is foolish.

Whomever told you that seeing $30k as an AGI as a go/no-go for considering a loan is a complete moron.

My gut tells me that you've gotten some of this advice from a broker or banker that was too lazy to actually earn their yield spread premium.

Actual you are correct my mother inlaw is a 25yr loan officer and I dont think she is a moron forsay. We all know when you fill out a loan application you will have to provide proof of income on paper not just say I make X amount of dollars.

For example how can someone lend a 100k loan with an AGI of 12k a yr even though you pay 1k on rent and you are able to afford it dont mean the lender will take the same risk a landlord does.

A good rule of thumb is that should not exceed 28% of your AIG. However, many lenders let exceed to 30% then you take in consideration your other expenses like child support, any other loans you currently have and credit cards and those put together can not exceed 36%. Lenders like to see numbers on paper they are not going to go by what you tell them thats why they require 2yr taxes if you are self employed. If you know of a lender that would lend 100k loans to a self employed person that has a 12k AGI. No need for someone asking the question its being asked.

Like (chefdennis) mention early This is an example of 1 reason to set your business up properly (incorporate) and set yourself up on a salary....even if just on paper....you show an income, the corp takes the deductions and runs at a loss if thats what you and your accountant feel the need to do....

But that being said, as has been pointed out, there are underwriters that can make this happen if it is as you stated, but you will have to do the leg work...

 

[FlyingVan]

Thank you guys. I appreciate all your input.

 

[Ragman]

If you would like to live on a lake in Missouri, there is a mobile home for sale on Lake of the Ozarks for $5,000 and another for $9,000. The water is just a few feet away. It's just out side of Stover.

Pay cash, live like no one else, so some day you can live like no one else.

Not a lot of culture, but lots of fish to catch.

 

[DannyD]

You are accurate & I stand corrected. I hadn't thought about Credit Unions selling the loans & therefore needing a tighter guideline.

Financing a vehicle and financing a home are two very different animals.

Credit Unions may underwrite conforming and govvie loans, but they're still selling to the big 4 banks (over 95% are), and have to underwrite to those banks' standards.

Vehicle loans are 'portfolio' loans (loans that they keep). Very, very seldom does a credit union keep residential mortgages in-house.

Going to a credit union is a good place to start, but the end result is the same if the LO isn't too lazy or isn't too dumb to add back paper losses from the tax return.

Fastman- You would be shocked at some of the exotic crap that was being jammed down our throats in those days. One company actually sent us flyers of their "just out of the pen" (meaning just got paroled) loan....and, you guessed it, 100% financing if he had a job....even if he started the day he got out, as long as boss would verify that he hired him.

And lastly, Gardair's advice is the best yet.

 

[tumbleweeds]

Oh, this cabin looks much better than the mobile homes I found at Stover, Missouri. Everything else looks the same. Cept ol Jed was such a good shot, how did he miss and hit the oil? Hollywood always forgets the details.