Anyone pay themselves as a W2? Need mortgage...
 

What a nightmare this has turned out to be over the past 24 hours. I work with a company and few months ago asked to be paid as a W2 so I could apply for a mortgage and get a place instead of spending $1200/mo in renting a 2bd apt.

So today talking with a loan officer at the bank, I'm basically fucked because they cant use my 1099 income because of my write offs (yeah I know, I should just pay taxes instead of trying to grow my business). Over the past two years I have dumped a LOT into development and software, as well paying for designs, etc. I know there is a high ROI on this, but it is not right away and I'm fine with that but paying for it in not getting a loan.

Anyway, it comes down to that I need to pay myself as a W2 instead of a 1099 or I don't stand a chance of getting the loan I'm looking for... anyone doing this now and what did you do to set this up?

I even tried to explain to the bank that I wouldnt spend so much on other expenses, but that was worthless as they dont care but what is on your taxes :mad:

Tell them you forgot about that one company that pays you $xxxx every two weeks for advertising consultations.

If they need past proof of taxes then you might have to tap into your business funds and have an accountant handle the last 3 years of payroll you "forgot" to take care of. The more cash you have at your disposal the higher you can claim your income was/is. If your business funds get tight you can always invest in your own company with that money it's not like its all going to be taxed.

$1200 in taxes and a nice house or $1200/mo to some landlord forever

i could help you john but i dont like you

:(

will $5 change your mind??? :winkwink:

the good news (if any) my shady accountant NEVER filed my taxes last year, so I could probably have some things changed around, but waiting to hear back from a local accountant which I'm sure will cost me a bit

Oh, I would LOVE to have a SHADY accountant handle my business! Especially when it comes to taxes and stuff which you can go to jail for not doing properly, I always prefer to have someone really shady to handle that for me, makes it so much easier to sleep at night... </sarcasm>

I feel for you. I have a similar situation, a European company holds most of my earnings. I had to get my parents to take out a loan for me to buy an apartment, since I wasn't making enough/paying enough taxes to get the loan myself. The fact that I control that company holding my earnings, and could choose to payout much more each month didn't bother my bank at all. If it wasn't in my personal tax records, it just didn't count.

its not that I went out and tried to find someone who had a drug, drinking and gambling problem.

he was the accountant for a number of larger clients and even some that we in Bev Hills. I was a small fish to him, so I can only imagine how he fucked others over.

but... if there is any silver lining on this shit cloud its that i may be able to go back and adjust my income to increase it rather than using every expense possible. we'll see

you can do it this way, and it is actually the recommended way.
open an "S" corp, set yourself up as an employee with a fixed monthly salary...
i am in california, my accountant recommended doing it this way as the IRS frays upon doing a straight S corp since it is/was a way for many realtors to avoid paying in payroll taxes.
the profits from an S corp goes into your pocket and you pay income tax on the profit, but not payroll tax (such as social seurity, unemployment etc).

:thumbsup

but can you back date this tho? meaning, can i go back and pay myself from 2009 or does it have to start at a certain date?

No, you cannot go back and fudge the books (legally).

getting a mortgage can be a retarded process for some. i think its hilarious that some banks are so hesitant despite you are paying 1k plus for rent and the mortgage would only be a few hundred more a month..

What if you are over extending yourself with the rent?

Setup an LLC and pay yourself out on salary... It's actually much easier for tax reasons as well and you end up paying less taxes overall...

it is seriously retarded. two banks I talked to and they said its the mortgage insurance companies that have the final say, and they are more strict about things and they dont like to use any 1099 income unless it has been pretty static over the past 3 years.

the loan officer said he knows from his end they would be fine with what I am providing to them, but when it comes to PMI companies, no dice.

the other option is to pay off a huge chunk of any credit card debt and get one of the two cars completely into my gfs name which will lower my DTI (debt to income ratio), but then I will have less to put down which will give me a slightly higher interest rate (about .25%)

or i can just come up with $60k to put down and not have to worry about the mortgage insurance companies :1orglaugh

i think what a lot of people dont take into consideration is property taxes and PMI. that alone can add up another $600 to $1000 easy on top of your mortgage payment.

correct, however if you have 20% equity then you pay no PMI.
cash is king, large downpayment is what the doctor ordered..
property taxes are tax deductible though, but alas still an expense to deal with.


and no you cannot back pay yourself, plan a little ahead.

A mortgage is a 30 year commitment typically. Renting an apartment is very little commitment.

Two different ballgames.

is your business setup as an S-Corp, if so you can show your K-1 form, and if you're the only owner 100% shareowner then your past business filing should be enough.

Sure but you are going to have to pay rent *somewhere* no matter what.

What's up Bossku69? Try out your local credit union. A lot of the smaller credit unions maintain the serving rights in house versus the larger banks that are looking to sell on the secondary market through Fannie and Freddie. Basically, big banks and online mortgage companies are subject to the recent gov pushed guidelines and there is little wiggle room with guideline exceptions. Smaller local banks are a bit more flexible because they are not subject to the same fannie and freddie mac guideline changes if they keep servicing rights in house. You will have to do a little research on your own to find a flexible credit union. Hit me up if you have any further questions. I was in real estate finance/mortgage industry since 2002.

Jchedda from Fling.com ICQ 574 008 320.

so?


You dont make a rent payment you get evicted and your place is cleaned and rented out in less then 2 weeks. You miss enough mortgage payments, you get evicted and the bank is sitting on real estate it does not want with a good chance of taking a loss on it.

Considering the the financial mess we are in is tied directly to the mortgage business leaves me baffled how some can complain about the underwriting process

thanks :thumbsup

im talking to a small credit union now. its the same place I have my auto loans through and they were very lenient on that process, so figured this would be easier... but no.

im told that no matter what I need to have PMI until I reach 20% equity. he said there are a few "tricks" if the value of the house is much higher they will take that into consideration but my DTI is about 50% and can not be any higher than 45%

Fha
 

Yeah, option is either to check with another credit union or go FHA Product. FHA will take higher risk because it is gov insured. You can also negotiate with them on fees and points. Best is to shop. Most places have a match and beat policy. FYI most places u can knock down at least 1 point off the basis points fees.

Maybe your credit union just doesn't want to cover 3 loans from you.. Try applying for what you owe on both cars + the budget you want to spend on your home. Then go in with the most you can do for a down payment and use your two cars as collateral.

They told me they have no problem. they can see my balances and know how much I make, but they are certain the MI company will turn it down because of the higher DTI rate.

Shitty thing is they said two years ago, they wouldn't of even worried about giving me a mortgage, but after these MI companies did research, they found the people who were not paying their bills are the ones with a DTI between 45% and 60%

I'm not stressing about it, but I was trying to get this in before the $8k tax credit expired. We've been looking for a while and the tax credit would be nice for some upgrades :winkwink:

You are pretty much screwed right now without the large down payment. And going FHA right now is out of the question with their getting stricter everyday guidelines. I have been in the mortgage business for more than 10 years and specialized in FHA/VA Loans but when everything changed 24 months ago I lost all my LO's working for me because the lenders slammed the door on the easy lending guidelines.

In a way I am kinda glad because anybody who could fog a mirror could buy a home. We used to have AE's come in and tell us "how" to get a loan approved on the subprime/Alt-A side of things which is where you would fall being "self employed". Unfortunately it is where me and my wife fall as well with me slinging Dildos now and her owning a mortgage processing company. I will get back into mortgages because it does pay well but I like doing this job so far.

At the moment I think you are out of luck on buying a home with current guidelines unless you have atleast 20% down. But if you were illegal and have a green card or been using the same social for 2 years then you can do a I-10 all day long AND get down payment assistance on top of that. It sucks when the government still does these loans but can't do it for tax paying legal residents :( but thats the way the cookie crumbles.

good luck

've been paying rent for 10 years and have never been late. However the past couple of years I have been investing heavily into my business so on paper, so my income on paper doesn't look great. I doubt I would get a mortgage for 300k (which is what I want) yet my payment would only be a few hundred more a month than I am currently paying for rent and have been for the past 6 years without a single issue. I'm sure this is never taken into consideration yet should be in some cases.

$25 would :disgust

No you do not HAVE to pay rent somewhere.

You forgot all the extra costs of owning instead of renting (taxes / sudden repairs, maintenance etc you never need to deal with as a renter)
Rent: 1000
Loan: 1200
Loan + costs related to owning: 1500-1600
THEN there is normal utilities, tenant: 1400 in total, home owner 2k (add another 200 for home owner associations)
Misc costs related to owning a place may differ based on location
Don't forget that almost 2% of all homes is in foreclosures and companies that backed the loans is getting government aid to survive.

You make a good point about added expenses. In my case I already pay my own utilities (gas/electric) except water. Right now, with using an average of my utilities, i pay 1300 a month already. I guess I need to find a list somewhere that would point out all of these hidden costs because besides property taxes and unexpected repairs, I can't really think of much.

I suggest just getting a parent to co-sign and be done with it...that is what i did wiht my first apartment. But i agree with loan places beign fucked. I make 6 digits in dollars after taxes, literally 20-30 times what the average person in this country makes, but couldn't even get a fucking car lease in this retarded country because my company was not a year old (i had it reg'd in canada before, now in poland)