Posted: Wed Mar 23, 2011 11:47 am Post subject: 734 credit, have 20% to put down, but I co-own a business :(
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After several years of looking, I've finally found a $190K dream house close to my shop that I want to jump on before someone else does. Houses in this neighborhood NEVER go up for sale!! I've looked at it several times w/ a contractor and it only needs cosmetic work done. So first I went to a mortgage broker, but I was put off by the $5,000 in fees they tacked on for themselves just for one meeting, plus they wanted me to take out an FHA mortgage despite the fact that I'd saved up specifically to put 20% or more down on a house! Which meant my monthly payments would end up being hundreds of dollars more than a conventional loan. So I went to my local credit union, and everything was looking good at first (I have a 734 median credit score, my income is just high enough to qualify on my own, and I have proof of income for the shop I own with the last 2 years' worth of tax returns)...
BUT! Here is what kept me from getting a loan w/ the local credit union: I've only owned the business for 1.5 years. It's a 25-year-old business that my boyfriend and I bought in August 2009 and changed the name of - so I don't have a full 2 years' worth of history owning this business. My partner/boyfriend worked there for 6 years before we bought it.
Another problem is that despite my high credit score, the credit union requires me to have 5 different loans or credit cards on my reports, and I only have 3 - a $20,000 personal loan (paid off), a $7,000 personal loan (paid off), and a $13,000 student loan (making all payments on time). I also have a $50,000 business loan which we have paid off halfway, making all payments on time. But that doesn't show up on my personal credit. I do not have any credit card debt, which it seems they really want me to have.
So, I tried to apply with my mother as a co-borrower, but her existing mortgage makes her debt to income ratio too high to qualify on her own, and we each have to qualify separately for the full amount (I didn't realize this). This also means I can't apply with my partner, because I own more of the business than he does, and this makes his income too low to qualify separately for the loan.
DOES THIS MEAN WE HAVE TO GET MARRIED??? If we got married, would they count our income and credit history jointly? Does this mean we'd have to file our tax returns jointly next year, though? That would make us owe a lot more in taxes. I'm not sure what to do.
IS THERE ANY "NON=CONFORMING" LOAN I MIGHT QUALIFY FOR? Like a 5/2 or something? I really don't want to get an FHA loan, because the extra insurance tacked on would make the mortgage unaffordable for me, ironically. This is really frustrating, because I am SO CLOSE to qualifying for a conventional loan! Are there any bigger banks that are more lenient??
It is not mandatory for you to get married. You and your partner can jointly apply for the mortgage. Applying jointly for the mortgage does not mean that you'll have to get married. If you apply jointly for mortgage, then the lender will consider the income and debts of both of you.
Feel free to ask if you've further queries.
Sussane
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Posted: Thu Mar 24, 2011 10:08 am Post subject:
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Sussane,
I was told that if we apply jointly w/o being married, we each have to qualify for the mortgage separately. Meaning, I have to qualify on my own, and my partner has to qualify on his own. Do most banks do things this way, or is my local credit union just especially strict? They said they could not pool our income and debts, they would have to consider us each separately.
If you jointly apply for a mortgage, then both of you need to qualify for the mortgage. All the lenders will want you and your partner to qualify for the loan or it will become risky for them to give you the loan. _________________ Procrastination is the enemy of your financial success
Posted: Fri Mar 25, 2011 8:44 am Post subject: Self Employed
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Being married or not married has nothing to do with qualifying separately. If two or more people are borrowing and buying AND living in the same house (guidlines are different for non occupant coborrowers). All incomes and all debts and all credit scores for borrowers who will live in same house as an owner occupied house are considered jointly/together.
Getting married or not married does not change the length of your self employment. The guidelines are the same for conventional and FHA--must be self employed for two years or longer and the income is averaged over most recent two years. Hopefully, you had a good first 12 months so it does not drag down the second twelve months.
Automated underwritng may allow just most recent one year tax return and the first 12 months, if lower, does not hurt because it need not be counted.
Guidelines allow for less than 24 months self employment but never less than 12 months. Under 24 months is an exception some lenders may do. To get the exception usually requires doumenting that you are in the same business you have been in for many years and you are established in that business in the area and maybe even have retained many of the same clinets you had before you were self employed.
Aftre the sub-prime mortgage mess in August, 2007, it is more difficult to find some lender to do the exception. _________________ John Veenstra, Sr Mortgage Consultant
Approved Funding Corp
Licensed NJ NY CT PA
201-833-0123x278
Mortgage Forums 
lunaimee
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