re: Financing a house as a 1099 (self-employed)

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As a w2 in October, I was being offered rates near 4.2% but wasn't able to lock in without paying a steep premium. In hindsight, I probably should have bitten the bullet

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Wouldn't have mattered. The mortgage company would be looking for recent paystubs to close the loan and they would reverify employment.

As much as I dislike Obama his programs have nothing to do with this. Self employed borrowers have always had to provide a 2 year history unless they were putting enough down to do a no doc loan.

I left my W-2 job in the middle of the year almost 2 years ago. I wanted to do 20% conventional. Chase originally told me I would have to wait 2.5 years for a loan from them because the W2's needed to be full years of self employment.

I thought that was bull, so I checked around. I knew someone at Synergy and they told me that after the 1 year mark they could do an in house loan with a higher rate until I made the 2 years and then I could refinance to something normal.

After 1.5 years (2nd tax return), I explained my situation to Chase and synergy again. After getting the right people on the phone, they both agreed they could give me normal loans at that point. I guess it depends on the managers and your situation. Also got a number of rate quotes from mortgage brokers.

Now I have decided to build a house and I get to go through the same process again, because the mortgage guy I was going to use doesn't do construction loans

call you local Whitney Bank they can take care of you. We call these professional loans when a doctor or lawyer is making the jump to 1099. the "hypothetical" situation he or she would need 6 months of 1099 income for the bank to get a projection from. i do these type of loans a few times a year. lenders and brokers cant do them. whitney's portfolio rates are very low compared to your smaller banks

Doctors are different. There are specific mortgage programs for them.

I have a couple of buddies that are doctors. I'll see if they know although at this point they are established in their practices.

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two years 1099 was required for a full income disclosure loan long before Dodd Frank

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Yep.

Bad timing building & changing to 1099. Over the years we have "side-stepped" the issue this way. Our business was an S-Corp. Salaries were paid, employment taxes paid, quarterly reports filed and income reported on a W-2. Never had a problem obtaining mortgages. If their is additional profit, it flows through to you on a K-1 & you do not pay self-employment tax on the K-1 income.

If the business is a LLC, the LLC can elect to be taxed as an S-Corp. Same result. The Obama administration is trying to close this loophole for an LLC in the 2015 budget, so this option may not be available very much longer.

Sounds like you may have to live with the higher rates for awhile & than refinance in a few years. Good luck - let us know the out come.

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