Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
mortgage question
My husband is a partner is a small business that is an LLC. We are in the process of closing on a house, but the lender is being a pain. A loan that has already been paid off was showing on a tax return or something. So the underwriter was deducting the payments for the loan out of our personal income. We had the bank write a letter saying that the loan was already paid off and with busniess funds, not with our personal income. Now they want to see the business bank stmt showing funds paying off the loan. Part of the loan had been paid of with business funds, but the business got an SBA loan that paid the rest of the loan off. The business makes payments on the SBA loan on a monthly basis. We are afraid now though that if the mortgage company sees how the first loan was paid off they will try deducting the SBA loan payments from our personal income as well. Its starting to get frustrating because the business handles its own expenses and we handle our personal. Has anyone else have an LLC with loans and tried getting home loan? any advice?
Re: mortgage question
I have been in real estate and a licensed Realtor for the past 9 years. Although I am not a mortgage broker I have a lot of experience with mortgages and loans.
Due to the number of foreclosures and defaults the lending world has tightened it's purse strings. You have probably figured that out if you didn't already hear it in the media.
It's all about income and liability. Although a loan may have been taken out in the name of the LLC your hubby may have signed up for personal liability as well. Typically a lien release would be required to clear it with a lender. Sometimes just a letter isn't enough and proof of payment is required.
If you or your husband qualifies for the loan without the income from the LLC you may be able to A) get the loan without the hubby and therefore no LLC problem or
Not count the LLC toward income or liability keeping it totally seperate from the purchase.
I know plenty of buyers that have LLC's but draw their major income from an employer and they have no problem getting loans. If the LLC is the majority of income it would be best to find someone who is very familiar with them and all the little details needed that come with it.
There isn't a shortage of lenders out there willing and able to get something like this done. Whoever is working with you now may not be familiar with LLC's and therefore unable to anticipate these issues.
Since you probably didn't know this could or would cause the loan process to be a pain you should probably talk to a few other lenders and discuss the situation and what would need to be done to get the loan approved. Good luck!
I am assuming that he is filing an 1120? S corp returns? Are they subtracting the mortgage/notes/bonds payable in less than one year? If they are comparing your 2009 taxes to your 2010, and that note was not there in 2009, it would be appropriate to deduct that amount from your income.
Try furnishing 12 months cancelled checks and bank statements to show the business is paying the loan. Did your husband sign for the business and then co-sign for it personally?
Is this FHA or conventional?