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Mortgage Questions?

Posted on 3/9/11 at 8:57 am
Posted by DoubleDeuce
Lafayette
Member since Sep 2006
832 posts
Posted on 3/9/11 at 8:57 am
I am an independent contractor that, by my CPAs instructions set up my business to be taxed as a regular corporation and pay myself and my wife a salary. I am looking to get a mortgage and have started to get information from various lending institutions and it can be difficult to really figure out what I can use as income.

I need to show them 2 year tax returns (1120 - Corporate & 1040 - Individual) for an average.

What I am nervous about is that in 2009 I showed a majority of my income on the corporate side and low income on the individual and in 2010 I will be doing the opposite.

One mortgage officer sent me a Fannie Mae Cash Flow Analysis to begin figuring out what income I can use for mortgage underwriting purposes and I have filled it out completely. My grand total increases substantially, but my corporate taxable income decreased substantially as well.

My question is: Am I okay to believe that the mortgage underwriter will be fine with the drop off in corporate income, seeing that I compensated by paying myself I higher salary and dividend.
Posted by hawkeye007
Member since Feb 2010
6062 posts
Posted on 3/9/11 at 10:27 am to
this is going to be an UW call on this one. Normally with self employed borrowers you want to look at the salary you pay yourself then any profit you show in your S corp. If you dont show a profit then the UW is more than likely going to use your 2 year average of your salary. its a tricky situation with self employed customers.
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