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Self-Employed? Trouble getting approved?

Posted on January 9, 2013 by Ray Williams (NMLS #216267).

Are you bankable?  What does that mean?  Back on the 21st of December I wrote about “showing enough income”.  I can’t stress this topic enough, and I feel it is a good time to address again.  All too many times someone who is self-employed has some trouble getting approved for a home loan.  Why? It is because it all depends on how much you can PROVE your income accurately. In order for a lender to accurately calculate your income they will need two years of tax returns.  As a lender we are required to submit two years tax returns for self-employed borrowers to underwriters.  What happens is that on average the tax returns will show a loss or a very low profit.  This happens because too many deductions are being claimed and/or too many write offs.  Yes these deductions and write offs can help in offsetting what you owe the IRS, or helps you get a better refund, or both.  But what this does is shows very little income and makes it difficult for you to get  approved for a loan or at least a loan that truly reflects what you earn.  How can you fix this?  Talk to your CPA/Accountant, let them know you are wanting to buy a home and that you need to reflect an accurate income. Let them know what you are wanting to do, whether it be buying a home or refinancing your existing home. They can then help guide you on what you should be claiming, deducting and writing off.  Now I am not a CPA nor an accountant, but as a lender I have to calculate income and in order to calculate income accurately, I have to go off of your tax returns. Don’t shoot the messenger.  We are here to help you.

If you have any questions or would like to arrange a consultation to get pre-approved please don’t hesitate to call and/or email me.  Click here if you would like to complete a secure online loan application.

Make sure to also follow me on Facebook, Twitter, Google+ and LinkedIn! Whichever social media you prefer we are connected!

Cheers~

Ray Williams

Branch Manager

Summit Mortgage Corporation

rwilliams@summit-mortgage.com

303-779-0591 ext. 101

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