Preapproval, previously self employed

neviller

Hi Ladies, I have a question I really hope you smart gals may be able to help me with.  DH and I found a home today we fell in love with and are more than likely going to make an offer on tomorrow.  We sold our home a month ago and have been staying with family until we find a new one. We will be going to the bank tomorrow for a pre-approval and I have a few concerns.  DH (our primary income provider)  was self employed as an IT contractor for 6 months of 2011.  During this time an opportunity to work for a great company came about and he took the job working as a W2 employee in August 2011. He has worked in the same field of IT for almost 10 years, never had a gap in employment.  But, I worry about the effects of working 6 months 1099 last year and only being in his current w2 position for 6 months?  Can anyone offer any advice or what we may expect tomorrow when we go for our preapproval? In the past we have had excellent credit and I honestly didn't really think about all of this until now.  We weren't in any hurry to find our new home, we were going to take our time and find the perfect house, turns out the perfect house found us : )  Hopefully....

 TIA!! 

kaylie622

There is a recent post on this from a few days ago that might be helpful. It sounds like you should be fine if there are no gaps in employment. I think switching to W-2 will work in your favor. I would bring a few extra years of tax returns and w-2s if you have them (maybe go back 4 or 5 years). Sometimes they want longer history for self-employed folks.

lil_jen051708

I think with 10 years of employment in the same field, you'll be fine.  Have you filed your 2011 taxes yet?  I think the mortgage company will want to see your 2011 net income since he was an independent contractor... so just be prepared for that. Good luck!

MurrayWagner

I am in nearly the exact opposite situation and posted about this (look a few threads down).  I have always been a W2; however I went 1099 in September 2011-present.  Being a current 1099 ended up getting me denied (not due to income qualifications, purely 1099 status).  I was however told by 2 loan officers (1 credit union, 1 Wells F.) that if I moved to a W2 I would immediately be pre-approved.  The loan officer at Wells Fargo went so far as to suggest that I should just move to a W2, get approved, and move back to a 1099 position after my purchase is complete (I definitely wouldn't intentionally do this as I feel it seems shady/misleading).  However, it's strong evidence that banks prefer W2.  Given that your husband is on a W2 now, I don't think you should have any problems.  Best of luck to you and your husband!!