No Doc – No Loan!

After a couple of conversations  recently concerning writing off income and getting a loan I figured it’s time to just write it down…

I had clients recently who were really well qualified for a house purchase in Bethesda but encountered quite the shock when they were turned down for a mortgage.  High credit scores and a substantial downpayment still couldn’t counter the fact that they are self employed and legally write off large amounts of their income. The days of no doc loans are long gone and the lenders are so scared to make any mistakes with these loans  so there is just no source to fund them.  Rightfully so, still the clients were really angered that they wrote off what they legally could and still were penalized at the mortgage table because now they couldn't show enough income to qualify.  Ugly circle…

Another client mentioned they are self employed and write off large amounts yesterday and I made sure to tell them that in order to get ready for a home purchase, it’s wise to consult their lender and their accountant so they can prepare for the income documentation required to qualify.  For self employed people who write off a lot of income, there is substantially more preparation in the home buying process.  As we discussed, it may mean that you write off less this year so that you can show income on your tax returns.  Good preparation financially means we can get you into the house of your dreams.  

Financing in general is so much more difficult than it’s ever been and self employed status really complicates the picture further.  It’s a good thing  to ensure that buyers can actually afford their loan, but when you are in the thick of it can be super frustrating!

Moral of the story…  get a really good lender relationship going now and ensure that you are financially ready for your purchase!