Lenders, Wake the fuck up!

[Dead]

This will read like a story of two tails....
I am in the process of trying to relocate to better myself and the ones I love.
Self Employed is a bad thing when it comes to securing a loan? Why?

I have managed to make all things happen in my world with No assistants from any outside source, albeit banks or any government program, yet I am judge as a risk?

I employ 4 men, full time, all benefits, hell I even pay their payroll taxes and still the lender see's me as a risk.....this system is fucked. They should reward the one's that make their own way without any handout, from the state or welfare program someone put into place.

Well, Fuck you Merika banks, and I will pay cash for my next purchase like I have done for years! Thanks for making another person that could contribute to your silly game decide my own path. Cause clearly, my way works, and the way you wish to paint my next color will be a hand forced to use the wrong stroke
Good luck All you Self Employed! They Love you!

[crockett]

Lenders don't like anything out of the norm.. At the end of the housing crash, I was trying to buy a 4 plex apartment building which needed a bit of remodeling. I couldn't get anyone to loan money despite the remodeling not being anything structural or major. It was all simple stuff like drywall repairs, remodelng bath rooms and kitchens..

They wouldn't loan me money because I wasn't a contractor, meanwhile they would lend me money on a property which was $100k more and even if all the units were filled, the money wouldn't have covered the mortgage.. So their logic was its ok to lend on something where you are under water because it's in perfect shape, vs lend on a money making building that was a fixer upper..

[SilentKnight]

That's partially the reason we incorporated years ago. When we launched as a sole proprietorship - RevCan regarded the company and myself as a single entity. And since we kept the company in the red for the first few years (on paper)...it hurt my personal credit availability.

After incorporating, I drew a salary as president of the company and could file personal income again...which in turn boosted my credit rating.

[L-Pink]

Funny how business owners are a risk when applying for a mortgage. But their employees aren't.

[Dead]

Originally Posted by crockett

Lenders don't like anything out of the norm.. At the end of the housing crash, I was trying to buy a 4 plex apartment building which needed a bit of remodeling. I couldn't get anyone to loan money despite the remodeling not being anything structural or major. It was all simple stuff like drywall repairs, remodelng bath rooms and kitchens..

They wouldn't loan me money because I wasn't a contractor, meanwhile they would lend me money on a property which was $100k more and even if all the units were filled, the money wouldn't have covered the mortgage.. So their logic was its ok to lend on something where you are under water because it's in perfect shape, vs lend on a money making building that was a fixer upper..

Safe bet I get that, but when you open the books on a very simple deal, with all equity in tack? They run like you have the plague? Strange the way the motion of events has scared the pillars?

[Dead]

Originally Posted by L-Pink

Funny how business owners are a risk when applying for a mortgage. But their employees aren't.

I just asked my wife the same question, ....Why are the business owners not liable?

[Dead]

Originally Posted by SilentKnight

That's partially the reason we incorporated years ago. When we launched as a sole proprietorship - RevCan regarded the company and myself as a single entity. And since we kept the company in the red for the first few years (on paper)...it hurt my personal credit availability.

After incorporating, I drew a salary as president of the company and could file personal income again...which in turn boosted my credit rating.

Scorp all the fucking way!

[Dead]

In the end, we should all suck a cock and would have a better chance in the lenders world? Upside fuckingdown

[Dead]

Pissed is all,.......I have everything in place and feel like a criminal

[Dead]

No debt at all apparently is a bad thing?

[SilentKnight]

Originally Posted by L-Pink

Funny how business owners are a risk when applying for a mortgage. But their employees aren't.

Well, typically banks will have access to the company financials when the owner applies for credit - so they can see the earnings and stability of the company. With employees they don't have that luxury and it's more of a good-faith gamble on the bank's part.

[Dead]

House is paid for, one card, Amex, paid every month in full,...yet Im a risk?

[Dead]

Originally Posted by SilentKnight

Well, typically banks will have access to the company financials when the owner applies for credit - so they can see the earnings and stability of the company. With employees they don't have that luxury and it's more of a good-faith gamble on the bank's part.

Just sent full discloser, opened the books.....

[SilentKnight]

Originally Posted by Dead

No debt at all apparently is a bad thing?

Yes and no.

Banks like to see a proven history of credit repayment - that's what they give lending weight to mostly.

Banks are inherently suspicious of someone with no debt at all...since they go on the assumption that almost everyone conducting legal business incurs some measure of debt at some point.

I always had a flawless credit rating personally prior to starting the biz. And was rather shocked when I learned the biz was actually hurting my overall credit score. I had to scramble and take a crash course on finance to sort through it all.

[Dead]

Originally Posted by SilentKnight

Yes and no.

Banks like to see a proven history of credit repayment - that's what they give lending weight to mostly.

Banks are inherently suspicious of someone with no debt at all...since they go on the assumption that almost everyone conducting legal business incurs some measure of debt at some point.

I always had a flawless credit rating personally prior to starting the biz. And was rather shocked when I learned the biz was actually hurting my overall credit score. I had to scramble and take a crash course on finance to sort through it all.

Good advice, i too, am in a learning curve. going to open up some cards in the morning to establish "credit" How fucked is that? So a man, self made with no ties to the bind is judged poorly?

Again, I run at least 5 digits thru AMEX with never missing a payment, but because they never Allowed me to do such business= credit risk?
Newb here trying to get another house loan is all, thanks for all that have been down this road with advice!

[Dead]

Originally Posted by crockett

Lenders don't like anything out of the norm.. At the end of the housing crash, I was trying to buy a 4 plex apartment building which needed a bit of remodeling. I couldn't get anyone to loan money despite the remodeling not being anything structural or major. It was all simple stuff like drywall repairs, remodelng bath rooms and kitchens..

They wouldn't loan me money because I wasn't a contractor, meanwhile they would lend me money on a property which was $100k more and even if all the units were filled, the money wouldn't have covered the mortgage.. So their logic was its ok to lend on something where you are under water because it's in perfect shape, vs lend on a money making building that was a fixer upper..

Funny side note, I am a contractor, and can prove all income, yet they still are skeptical of my earnings, online and off....WTF does it matter how we earn, We Earn!

[SilentKnight]

Originally Posted by Dead

Good advice, i too, am in a learning curve. going to open up some cards in the morning to establish "credit" How fucked is that? So a man, self made with no ties to the bind is judged poorly?

Again, I run at least 5 digits thru AMEX with never missing a payment, but because they never Allowed me to do such business= credit risk?
Newb here trying to get another house loan is all, thanks for all that have been down this road with advice!

Just be careful with too many credit cards in the pursuit of building credit history. Often they'll look at your 'available credit' - even if you're carrying no balance on the card - and consider the 'available credit' as a liability. They'll think, "Hmm...he has $60k available on his various cards - and if he maxes those out...we might not get our money."

It's a tightrope walk sometimes.

Best of luck with it all. I was fortunate my father-in-law was an accountant and offered good steerage advice...and I worked for awhile with CapitalOne which taught me a little about banking/credit/financial insider knowledge.

[Dead]

With no help of the almighty power we are supposed to drop down and suck......

[Dead]

Originally Posted by SilentKnight

Just be careful with too many credit cards in the pursuit of building credit history. Often they'll look at your 'available credit' - even if you're carrying no balance on the card - and consider the 'available credit' as a liability. They'll think, "Hmm...he has $60k available on his various cards - and if he maxes those out...we might not get our money."

It's a tightrope walk sometimes.

Best of luck with it all. I was fortunate my father-in-law was an accountant and offered good steerage advice...and I worked for awhile with CapitalOne which taught me a a little about banking/credit/financial insider knowledge.

I hear ya, and kinda Know the game,...Thanks for playing the advocate,.. I will win this game, just a shame I should have to play at all. Fuckers

[arock10]

Uhm employees are treated the same as business owners, at most you need to come up with a third year of financials vs just two. If anything business can make it a little easier because your credit profiles are split up so you can run your biz CC hard while keeping your personals within the ranges the credit bureau

I know SK is Canadian, dunno about you, so maybe things run different up there

[Dead]

My Cpa will sort this mess, frustrated is all,..And I brought it to GFY, I need my head examined

[Dead]

Originally Posted by arock10

Uhm employees are treated the same as business owners, at most you need to come up with a third year of financials vs just two. If anything business can make it a little easier because your credit profiles are split up so you can run your biz CC hard while keeping your personals within the ranges the credit bureau

I know SK is Canadian, dunno about you, so maybe things run different up there

No here they will hold you to the fire, 15 years operating under the same cloak is no better then opening a business in the morning? This is why I pay people, does not make any financial sense what so ever. Sorry for bringing this to the boards, smartest fuckers I have ever had the pleasure to read from, was hoping they chimed in and was not let down! Thank you.....

[arock10]

Originally Posted by Dead

No here they will hold you to the fire, 15 years operating under the same cloak is no better then opening a business in the morning? This is why I pay people, does not make any financial seance what so ever. Sorry for bringing this to the boards, smartest fuckers I have ever had the pleasure to read from, was hoping they chimed in and was not let down!

Lenders are more sensitive to consistency. Employees are generally more consistent since they just have the same job year after year

But if you have a good year and then a bad year, they will just give you the earnings for the bad year even if you killed it the year before

[Dead]

Well, I have employed the same guys from the start, never going to change that fact. My problem currently, I am trying to leave the state I started the business in. Letters of explanation, can i Run this Remote? Will the business stand a chance if i don't walk in and take a shit in that zipcode??? Systems broke, yet we keep paying in....

[Dead]

See sig! I need the money!

[Dead]

Original question stands, when in this strange world would a man be condemned, because he has made all the right moves, be the one that lenders fear the most?
Have luck! I'm gonna go watch tv or something...Thanks for the insight and input! I will have a plan as always

[2MuchMark]

Hi Dead,

Sorry to hear you have trouble borrowing from the bank. I can tell you though from experience, that the bank doesn't care of if you're self employed or not. What they want to see are things like a good credit rating, steady income, little to no current debts, etc.

They also want to know your debt ratio. How much money do you take in every month vs your monthly bills. If you have to pay out 25% of your income to bills, thats not too bad. If you have to pay out 50%, the bank is less interested.

If you are going to borrow money for a project or to buy something, what they want to see is how it will be paid back. So let's say whatever you want to buy will be paid back in payments of $500.00 over 4 years for example, they want to see that you can easily afford that $500.

Don't forget that the bank actually wants your business. They make a fortune giving loans so when they see you they are drooling. They won't take any unnecessary risks, but they want your business.

What I suggest is that you do a little legwork first. Put something down on paper that shows your current income, all your monthly payments including to credit cards, etc, the new thing you want to buy, and finally, how you will budget to pay it back. This makes the lenders job easier.

Here's a dumb sounding "trick" that is actually pretty smart. If you owe money to credit cards or taxes, add what you owe to the amount you want to borrow. For example, if you currently owe $10,000 to credit card companies and want to borrow $40,000, ask the bank for $50,000, and tell them that the first $10,000 is going to pay off the credit card debt. The banks LOVE this. This keeps your credit rating high, makes more money for the bank, and reduces the banks risk all at the same time. Assuming you and your financial situation fits within their the risk assessment parameters, you should get the loan you need.

Good luck!

[ilnjscb]

Ain't it the truth brother.

The killer is you want low profits for tax purposes but need high profits for credit. Best thing is to work on the side as a contractor and get a 1099.

[Dead]

Originally Posted by **********

Hi Dead,

Sorry to hear you have trouble borrowing from the bank. I can tell you though from experience, that the bank doesn't care of if you're self employed or not. What they want to see are things like a good credit rating, steady income, little to no current debts, etc.

They also want to know your debt ratio. How much money do you take in every month vs your monthly bills. If you have to pay out 25% of your income to bills, thats not too bad. If you have to pay out 50%, the bank is less interested.

If you are going to borrow money for a project or to buy something, what they want to see is how it will be paid back. So let's say whatever you want to buy will be paid back in payments of $500.00 over 4 years for example, they want to see that you can easily afford that $500.

Don't forget that the bank actually wants your business. They make a fortune giving loans so when they see you they are drooling. They won't take any unnecessary risks, but they want your business.

What I suggest is that you do a little legwork first. Put something down on paper that shows your current income, all your monthly payments including to credit cards, etc, the new thing you want to buy, and finally, how you will budget to pay it back. This makes the lenders job easier.

Here's a dumb sounding "trick" that is actually pretty smart. If you owe money to credit cards or taxes, add what you owe to the amount you want to borrow. For example, if you currently owe $10,000 to credit card companies and want to borrow $40,000, ask the bank for $50,000, and tell them that the first $10,000 is going to pay off the credit card debt. The banks LOVE this. This keeps your credit rating high, makes more money for the bank, and reduces the banks risk all at the same time. Assuming you and your financial situation fits within their the risk assessment parameters, you should get the loan you need.

Good luck!

Thanks for the input, and I agree with most of what you wrote. Except the part about "banks do not care if you are self employed" that is bullshit. I have been self employed 25 years now and can say with out pause, they most certainly do. During that time, i borrowed money for a mortgage, paid it all back. Borrowed for a building to expand my company, paid it back. All at a higher interest rate because I was a risk, being self employed.

Current loan will be a bitch, because I am moving over state lines, expanding my business to another location. This scares the hell out of bankers. I have already jumped thru all the hoops, had to write "LOX" letters explaining how I'm am going to maintain current revenue from a remote location?

Keeping fingers crossed they will make the right decision and allow me to employ more people at my next set up.

Where the hell is Minte when you need him?

[Dead]

Originally Posted by ilnjscb

Ain't it the truth brother.

The killer is you want low profits for tax purposes but need high profits for credit. Best thing is to work on the side as a contractor and get a 1099.

Haha , that is what I did for my first mortgage, currently, there is no way I could pull that off. The irs would eat me for breakfast, lunch, and dinner...assholes.

[Relic]

Credit is only for suckers and rich people.

[AmeliaG]

Originally Posted by Dead

Original question stands, when in this strange world would a man be condemned, because he has made all the right moves, be the one that lenders fear the most?
Have luck! I'm gonna go watch tv or something...Thanks for the insight and input! I will have a plan as always

Because government regulation is stacked against the self-employed and this makes it harder for banks to get Fannie and Freddie guarantees on loans to self-employed people. This makes the bank's risk higher loaning to you, even if you are more likely to pay.

[arock10]

I would suggest calling around to small local banks and credit unions. They generally use their own money so they have a lot more leeway with it. Also all banks are different unless you are just dealing with conventional loans

[Harmon]

As somebody else stated, you're running into issues (I am assuming) because you are running your business as a sole proprietorship. You need to incorporate and have yourself listed as an employee. Title your self President, CEO, whatever. Have your accountant draw you up a paycheck weekly and deposit it... like you would if you worked for any other business.

You can pay yourself whatever you want. Do that for 6 months or a year and then you won't have any issues. This is all accounting 101. You should have been doing this for years. Running a business as a sole proprietorship has absolutely no advantages other than cutting down on accounting fees.

As a corporation, or even an LLC, you release yourself from any liability that the company may cause and leaves you held harmless. That's not to mention the insane amount of tax benefits you receive in the long run.

It sounds to me like you have been trying to limit your costs over the past 25 years in order to increase your bottom line when in all actuality you have been fucking yourself.

Also, you may want to look into a new accountant if this hasn't been suggested to you in the past. There is not a sane accountant in the world that would watch somebody run a business for 25+ years and not let them on to incorporating. It's asinine.

[huey]

Banks only lend money if you can prove you don't need it.

[Dead]

Originally Posted by AmeliaG

Because government regulation is stacked against the self-employed and this makes it harder for banks to get Fannie and Freddie guarantees on loans to self-employed people. This makes the bank's risk higher loaning to you, even if you are more likely to pay.

Great answer It is almost as they want the impoverished people more then the ones willing to build.

[Dead]

Originally Posted by arock10

I would suggest calling around to small local banks and credit unions. They generally use their own money so they have a lot more leeway with it. Also all banks are different unless you are just dealing with conventional loans

Already on it today, was speaking to a couple of local banks closer to the area we want to live and had some positive feedback, Thanks! Oh, and i have never heard of any of the names mentioned on any commercial;)

[Dead]

Originally Posted by Harmon

As somebody else stated, you're running into issues (I am assuming) because you are running your business as a sole proprietorship. You need to incorporate and have yourself listed as an employee. Title your self President, CEO, whatever. Have your accountant draw you up a paycheck weekly and deposit it... like you would if you worked for any other business.

You can pay yourself whatever you want. Do that for 6 months or a year and then you won't have any issues. This is all accounting 101. You should have been doing this for years. Running a business as a sole proprietorship has absolutely no advantages other than cutting down on accounting fees.

As a corporation, or even an LLC, you release yourself from any liability that the company may cause and leaves you held harmless. That's not to mention the insane amount of tax benefits you receive in the long run.

It sounds to me like you have been trying to limit your costs over the past 25 years in order to increase your bottom line when in all actuality you have been fucking yourself.

Also, you may want to look into a new accountant if this hasn't been suggested to you in the past. There is not a sane accountant in the world that would watch somebody run a business for 25+ years and not let them on to incorporating. It's asinine.

Fact! Sub Chapter S Corp, 24 years 11 months
I have found ways to limit profit gain with SEP accounts for my guys, and myself. And handle all health insurance, and payroll tax, thru the main business account....I love my accountant more then my own mother!

[klinton]

the real question is: do you dress like on your avatar ?
maybe thats the main reason....

Originally Posted by Dead

This will read like a story of two tails....
I am in the process of trying to relocate to better myself and the ones I love.
Self Employed is a bad thing when it comes to securing a loan? Why?

I have managed to make all things happen in my world with No assistants from any outside source, albeit banks or any government program, yet I am judge as a risk?

I employ 4 men, full time, all benefits, hell I even pay their payroll taxes and still the lender see's me as a risk.....this system is fucked. They should reward the one's that make their own way without any handout, from the state or welfare program someone put into place.

Well, Fuck you Merika banks, and I will pay cash for my next purchase like I have done for years! Thanks for making another person that could contribute to your silly game decide my own path. Cause clearly, my way works, and the way you wish to paint my next color will be a hand forced to use the wrong stroke
Good luck All you Self Employed! They Love you!

[Forest]

If you are in the states try quickenloan. Just closed on a house last week as an Scorp thru them with out one hiccup and it was the most painless process of any of the houses I have bought or refi'd in the last 8 years

[Dead]

Originally Posted by klinton

the real question is: do you dress like on your avatar ?
maybe thats the main reason....

Little less hair, more attitude, but yes, That's Me! do you think I will be judged?

[Dead]

Originally Posted by Forest

If you are in the states try quickenloan. Just closed on a house last week as an Scorp thru them with out one hiccup and it was the most painless process of any of the houses I have bought or refi'd in the last 8 years

Forest, that is fantastic news as they are one of the lenders that I am currently working with as well! i like the MyqL page for uploading docs to, very convenient, and it keeps it all in one place instead of countless e-mails.....fuck i sound like a damn commercial....


None the less thanks for chiming in!

[Dead]

What has GFY done to Minte, dude had solid advice????

[Forest]

Originally Posted by Dead

Forest, that is fantastic news as they are one of the lenders that I am currently working with as well! i like the MyqL page for uploading docs to, very convenient, and it keeps it all in one place instead of countless e-mails.....fuck i sound like a damn commercial....


None the less thanks for chiming in!

yeah the myql and everything uploaded electronically really made it very simple. I have closed 7 different loans in the last several years and never has it been that easy. Plus they didnt require all the bs docs the bank was going to make me submit like business pnl's lease agreements for my rental properties yada yada

Good luck with them!

[Dead]

Originally Posted by Forest

yeah the myql and everything uploaded electronically really made it very simple. I have closed 7 different loans in the last several years and never has it been that easy. Plus they didnt require all the bs docs the bank was going to make me submit like business pnl's lease agreements for my rental properties yada yada

Good luck with them!

They are off to one hell of a start! Funny, i was referred and laughed at the whole idea,...but they have been the most responsive.....Crosses fingers