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Answers (11)
- afiniti24
- Contributions:6
Corri,
We accrued lates on the student loans, but we were able to get a retroactive forebearance, so there was never a default on the student loans, and we continue to make all the payments as of January 2010.
The pay structure one is interesting. I'll work with my accountant on that one. Right now my S-Corp funnels through all income (1099, etc.) and I pay myself a salary as outlined on a W-2. Perhaps I should see if the LLC can direct the guaranteed payments through the S-Corp as well so that I can continue to receive and even increase the W2 income.
If not, it may be in my best interest to not scale back the S-Corp income January 1. I'll see what we can do there. I think the LLC is going to elect to be taxed as a corporation, so we'll probably see a similar setup to my current S-Corp in terms of income distribution, but I'm not 100% sure on that one. The investor providing most of the seed money will end up making that determination based on tax advantage/disadvantage for the LLC as a whole. So, it sounds like for all intents and purposes, we'll need to take the W-2 income as the basis for any loan being the LLC is new. So, my income might be skewed rather high, yet my qualification income might be lower than we want...basically thrusting us into a larger down payment scenario anyway. Hmm, should be interesting :)
We accrued lates on the student loans, but we were able to get a retroactive forebearance, so there was never a default on the student loans, and we continue to make all the payments as of January 2010.
The pay structure one is interesting. I'll work with my accountant on that one. Right now my S-Corp funnels through all income (1099, etc.) and I pay myself a salary as outlined on a W-2. Perhaps I should see if the LLC can direct the guaranteed payments through the S-Corp as well so that I can continue to receive and even increase the W2 income.
If not, it may be in my best interest to not scale back the S-Corp income January 1. I'll see what we can do there. I think the LLC is going to elect to be taxed as a corporation, so we'll probably see a similar setup to my current S-Corp in terms of income distribution, but I'm not 100% sure on that one. The investor providing most of the seed money will end up making that determination based on tax advantage/disadvantage for the LLC as a whole. So, it sounds like for all intents and purposes, we'll need to take the W-2 income as the basis for any loan being the LLC is new. So, my income might be skewed rather high, yet my qualification income might be lower than we want...basically thrusting us into a larger down payment scenario anyway. Hmm, should be interesting :)
- Corri Klebaum, "CorriKlebaum"
- Contributions:199
Pay structure whether W2, 1099, or K1 will have to have 2 years income supported. So if switching from K1 to 1099 you will have to have 2 years documented on the 1099.
The student loans must not have gone into defaulted status and been sent to the guarantee agency. If so you will have to have Title 4 eligibility reinstated through their rehab program. You would know if they were defaulted as a 25% mandated charge would have been slapped on them.
Your are not alone, keep on plugging away at it! Ignorance is bliss, hindsight is 20/20, but knowledge is power.
The student loans must not have gone into defaulted status and been sent to the guarantee agency. If so you will have to have Title 4 eligibility reinstated through their rehab program. You would know if they were defaulted as a 25% mandated charge would have been slapped on them.
Your are not alone, keep on plugging away at it! Ignorance is bliss, hindsight is 20/20, but knowledge is power.
- Bryan Young, "Bryan Young"
- Contributions:8
Until you reach out to a reputable lender or two, you will be speculating. Give them your scenario. If they are worth working with, they should be able to give you a fairly good "read" on your situation without having to pull credit. If you like what you hear, move forward on getting a pre-approval. To get a full pre-approval, you will need to provide documentation of income, assets, etc. and they will need to pull a credit report. Hope this helps.
- afiniti24
- Contributions:6
@Corri,
The student loans are older accounts. When we went through BK, we stopped paying on them for a bit, but since discharge, they have been 100% current. Our revolving credit really is minimal, and we pay it off every month. The timeshare is an installment, but we could choose to pay that off before hand easily to take our monthly debt obligations down to literally just $280 or so.
We struggled for many years carrying a very high revolving debt load, so there were times during those years where the student loan payment history wasn't perfect. Thank goodness those days our long behind us, but we were young and got in over our heads very early in marriage with credit and then paid the price for years.
Anyway, I just signed a contract with an LLC in which I'm a 30% partner with guaranteed payments of $6300/month for services rendered (1099 income), and my current SCorp brings in about $6500/month, of which we take out about $3000/month currently. I'll probably scale back the S-Corp work a bit after January 1, So the personal gross income starting in January will be in the 7K range after all business expenses are deducted.
Anyway, all that to say, we have some specific goals, we want to be ready to pull the trigger, and we want to give ourselves the best advantage possible when the time is right. Anything we can do to raise scores, and get ourselves in the best position possible to be ready to purchase sometime in 2012 is what we are aiming for. Just wish we would have been smarter about our debt handling when we were younger so we would have never been in this position.
The student loans are older accounts. When we went through BK, we stopped paying on them for a bit, but since discharge, they have been 100% current. Our revolving credit really is minimal, and we pay it off every month. The timeshare is an installment, but we could choose to pay that off before hand easily to take our monthly debt obligations down to literally just $280 or so.
We struggled for many years carrying a very high revolving debt load, so there were times during those years where the student loan payment history wasn't perfect. Thank goodness those days our long behind us, but we were young and got in over our heads very early in marriage with credit and then paid the price for years.
Anyway, I just signed a contract with an LLC in which I'm a 30% partner with guaranteed payments of $6300/month for services rendered (1099 income), and my current SCorp brings in about $6500/month, of which we take out about $3000/month currently. I'll probably scale back the S-Corp work a bit after January 1, So the personal gross income starting in January will be in the 7K range after all business expenses are deducted.
Anyway, all that to say, we have some specific goals, we want to be ready to pull the trigger, and we want to give ourselves the best advantage possible when the time is right. Anything we can do to raise scores, and get ourselves in the best position possible to be ready to purchase sometime in 2012 is what we are aiming for. Just wish we would have been smarter about our debt handling when we were younger so we would have never been in this position.
- Corri Klebaum, "CorriKlebaum"
- Contributions:199
The student loans could help if they are older accounts with a positive payment history.Your lender of choice could get those added and request a re-score. You will have to count them towards your debt liability if you are in repayment or will be within 12 months of your loan closing. With the figure of $7k month in income the maximum amount of your obligations would be $3010 at 43% if a manual underwrite. So say you have student loans, a couple of revolving accounts, and your timeshare as mentioned in your other post that add up to $500 you have $2510 left over to work with for your housing payment of principal, interest, taxes and insurance. The documentation of the income is key, all loses and non reimbursable expenses if any have to counted in your liability as well. Chances are the bankruptcy in your credit history will require the need for a manual underwrite but no way of knowing until you are past the 2 year mark. Plan for the worst and hope for the best... but better not to be overextended so that doesn't really hold true :)
Keep doing what you are doing, maybe even pay down the revolving debt beforehand, but not until you have met with someone.
As far as finding a mortgage professional, ask family, friends, and/or coworkers for referrals. If you are shy about the close-knit community I can relate. Know the advice solicited here on Zillow should be taken to heart as we are mostly professionals and could serve you just as easily.
Keep doing what you are doing, maybe even pay down the revolving debt beforehand, but not until you have met with someone.
As far as finding a mortgage professional, ask family, friends, and/or coworkers for referrals. If you are shy about the close-knit community I can relate. Know the advice solicited here on Zillow should be taken to heart as we are mostly professionals and could serve you just as easily.
- Bryan Young, "Bryan Young"
- Contributions:8
If you really want to know what your financing options are, you need to contact a reputable lender. In today's world, you will absolutely need proof of cash or a loan pre-approval to make most contract stick. Through my 20+ years in real estate, I have had the priviledge of working with many loan officers, and one of the best is Sean Zalmanoff at USA Mortgage - [phone number removed by moderator]. Bluntly, he will tell you straight up what issues are important, and how to work on improving your credit over time. FHA is king today, but you may have other options.
Bryan Young - Young Realty Group
Bryan Young - Young Realty Group
- afiniti24
- Contributions:6
@Justin,
All of our scores are already over 630. I just ran fresh reports tonight. Equifax was 633, Experian was 640, TransUnion was 690 for the vantage score, but the Credit Karma estimate for the TransRisk score is 651.
I did find a couple of inconsistencies on the report(s), such as our student loans not being listed, so if that would make a positive difference, that should probably be corrected.
Also, no derogatory credit since the bankruptcy. We have maintained all accounts in good standing, pay on-time, and try to make a point and pay off the credit cards every month so we don't carry a balance, but we do use them.
All of our scores are already over 630. I just ran fresh reports tonight. Equifax was 633, Experian was 640, TransUnion was 690 for the vantage score, but the Credit Karma estimate for the TransRisk score is 651.
I did find a couple of inconsistencies on the report(s), such as our student loans not being listed, so if that would make a positive difference, that should probably be corrected.
Also, no derogatory credit since the bankruptcy. We have maintained all accounts in good standing, pay on-time, and try to make a point and pay off the credit cards every month so we don't carry a balance, but we do use them.
- Justin Livingston, "JustinLivingston"
- Contributions:9
Good evening,
Yes, more than likely you will be able to qualify for a FHA loan with 3.5% down once you have hit the 2 year mark since your chapter 7. The biggest hurdle you will have to overcome is your credit scores will need to be in the 620-640 range depending on the specific lender guidelines. Also you must not have any derogatory credit since the discharge of your bankruptcy.
If you fall within FHA guidelines you will only be required to put 3.5% down!
I'm located in Bend & am an expert at analyzing even the most complicated tax returns. Please feel free to give me a call at [phone number removed by moderator] to start the pre-qualification process.
Justin
NMLS #270091
Yes, more than likely you will be able to qualify for a FHA loan with 3.5% down once you have hit the 2 year mark since your chapter 7. The biggest hurdle you will have to overcome is your credit scores will need to be in the 620-640 range depending on the specific lender guidelines. Also you must not have any derogatory credit since the discharge of your bankruptcy.
If you fall within FHA guidelines you will only be required to put 3.5% down!
I'm located in Bend & am an expert at analyzing even the most complicated tax returns. Please feel free to give me a call at [phone number removed by moderator] to start the pre-qualification process.
Justin
NMLS #270091
- afiniti24
- Contributions:6
@Corri, that is the best information I have received to date, thank you so much. What would you recommend in terms of lending options. Should I visit with a mortgage broker? Search online?
I know we're likely still a year out from purchasing, but I want to do everything possible starting now to make sure everything is in order and we're on track with our goal.
When you say buying power would be limited by the BK, what would that look like? Are you saying we'd essentially qualify for less? Are there any guidelines or rules of thumb in this area (I know things are constantly changing)? For discussion purposes, what about a "midscore" of 675, 3 years post BK, monthly gross income of 7K. Would it be reasonable to assume we could get a 3.5% downpayment with a loan amount of 180K? We could provide more downpayment, I'm just trying to get an idea of what this scenario might look like. We already have approx $20K available for down.
I know we're likely still a year out from purchasing, but I want to do everything possible starting now to make sure everything is in order and we're on track with our goal.
When you say buying power would be limited by the BK, what would that look like? Are you saying we'd essentially qualify for less? Are there any guidelines or rules of thumb in this area (I know things are constantly changing)? For discussion purposes, what about a "midscore" of 675, 3 years post BK, monthly gross income of 7K. Would it be reasonable to assume we could get a 3.5% downpayment with a loan amount of 180K? We could provide more downpayment, I'm just trying to get an idea of what this scenario might look like. We already have approx $20K available for down.
- Corri Klebaum, "CorriKlebaum"
- Contributions:199
3.5% down would be sufficient with FHA with or without the bankruptcy. Your tax returns will need to be analyzed by a mortgage professional to make sure your income was enough to support your current debts in addition to the new mortgage, taxes, and insurance. The bankruptcy could force a manual underwrite which would limit your borrowing power.
- afiniti24
- Contributions:6
Also, not sure if it matters, but we have never owned a home before, we would be looking to make a first-time home purchase. FHA loan was attractive because of past credit problem (Bankruptcy), and reasonable down payment requirements. But, will we be able to qualify in 2012?
Will I realistically be able to get an FHA loan in the next 12 months without a huge down?
Current mid-score: 640 (633/640/651)
Bankruptcy discharge: Nov. 2009
Self-employed: 4 years of personal tax returns. S-Corp with W-2, Also an additional LLC 30% ownership interest with guaranteed monthly payment of $6300. Current S-Corp wages of roughly 5K per month.
I am well aware that guidelines state a minimum 2 years since Chap 7, which will be in November of this year. Our personal tax return this January will be for $60K gross, but next year will be substantially more.
Will I be able, given the current climate and circumstances, to get a reasonable FHA loan without a large downpayment?
I have heard some say in Yahoo Answers forum (not exactly teeming with experts) that I would need a downpayment of 30% even after the 2 years has passed. Is this true? Am I really going to be ineligible for a reasonable FHA loan? I can see coming up with 10% pretty easily within this year, but 30% ($50K) seems excessive for FHA. What are my options? My credit scores seem to go up every month post-bankruptcy, we've worked to re-establish minimal credit, etc.
What are we looking at for FHA, is it really impossible to get a 5-10% downpayment loan with say a 660 credit score (maybe higher by then) strong income, and 4 years of tax returns for a self-employed with Chapter 7 bankruptcy?
Bankruptcy 2 year milestone is up in November, but we wouldn't be looking to purchase until next spring/summer anyway. That said, I want to start figuring out what else we can do to improve scores between now and then if possible.
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