Posted on: 06th Jun, 2012 06:30 am
My wife and I are trying to buy a vacation home.
We have been self employed for 14 years and our credit scores are close to 800. Our main home will be paid off in about 5 years and we have no other debt.
Everything comes out good in the initial approval in the bank, because they are using our total income. The problem is that we run 3 businesses and put most of our effort into whatever business where our work currently pays off the best.
This means that the profit for each business will fluctuate from year to year. One year business A will be most profitable and next year maybe business B will be most profitable and so on...
So at this point the bank see that profit from business A and B have increased from 2010 to 2011, but profit from business C has declined. Because of that they are removing ALL income from business C and calculate our average yearly income from business A & B only. This kills the deal for us even though our total profit from all 3 businesses has increased.
Are there any bank out there who will look at our actual total income so we can be approved? Any other suggestions to how we can overcome this problem?
Thanks
Mike
We have been self employed for 14 years and our credit scores are close to 800. Our main home will be paid off in about 5 years and we have no other debt.
Everything comes out good in the initial approval in the bank, because they are using our total income. The problem is that we run 3 businesses and put most of our effort into whatever business where our work currently pays off the best.
This means that the profit for each business will fluctuate from year to year. One year business A will be most profitable and next year maybe business B will be most profitable and so on...
So at this point the bank see that profit from business A and B have increased from 2010 to 2011, but profit from business C has declined. Because of that they are removing ALL income from business C and calculate our average yearly income from business A & B only. This kills the deal for us even though our total profit from all 3 businesses has increased.
Are there any bank out there who will look at our actual total income so we can be approved? Any other suggestions to how we can overcome this problem?
Thanks
Mike
The Fannie Mae guidelines regarding S/E incomeare as follows:
2 year average if income is stable or rising. If declining the most recent year. Obviously if there are lsses in one compnay, that loss will have to be offset by yhe income from the other two.
2 year average if income is stable or rising. If declining the most recent year. Obviously if there are lsses in one compnay, that loss will have to be offset by yhe income from the other two.
Above poster is correct. Go to another lender with your loan. The Underwriter should be using the recent year, as its less than previous for Business C. Or go to the managing Underwriter or upper management to see if your current lender is being overly conservative.
