Forums: Discussions for entrepreneurs and small business.

Ok, this is an issue that is very,no EXTREMELY, irritating to me! As you may be able to tell I am posting this at about 11:40 PM CST. I am losing sleep over this thing.  My business is less than 1 year old. It is also my fulltime job. However, when my wife and I found a house that we wanted to purchase, the lenders we spoke to practically laughed at us. They told us, well if your business was more mature or if you had a real job we could help you. Come back in 6 months. I can not believe that this is happening! Has anyone else had any issues with personal financing due to running a full time business from a home office? I have proven my businesses income as well as my income from this business and yet it is not good enough.  Any suggestions would be greatly appreciated.  The funny thing is that this was going to be my wife and I`s first home.  I thought that this was an amazing thing that was going to finally be realized thanks to this business I started.  In the same stroke it seems that the business that made it possible is also keeping it from happening. AHHHH! Best Wishes to you all! Thanks for listening to me.

Ken - it happened to me many years ago - same situation. Just kept seeking lenders and finally found one - they are out there - the interest rate was a little higher but we got a loan and a year or so later refinanced.

Have you tried all of the online lending services? Let your fingers do the walking.

R@

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Richard Arnold · Key Concept Writers · Business Communication: The "Key" To Success· Law of Attraction Blog · Life Ain`t Brain Surgery Blog

Ken - I`m a Mortgage Broker.  There are many different types of loan products and vary depending on your credit scores and documentation type.  The documentation type that will provide you with the cheapest interest rates are called full documentation loans or `full doc`.  This is where you show and prove your income and assets.  In the case of a self-employed person, your last 2 years tax returns with your schedule `C`, showing your `net`  income.  Of course, many self-employed persons write off their expenses and show little income,  so the `Stated` documentation loan is used,  but this is also subject to the 2 year in business rule.  In your case,  a `No documentation loan`, or No Doc, loan will work.  The less documention that is provided a lender, the more risk that is taken by the lender, so the higher the interest rate.  Other factors are: how much down payment you and your wife plan on putting on the home (loan-to-value ratio) and your credit history.  In your situation, you could purchase the home via a no-doc type loan, then refinance later when you have a 2 year history in business.  If a typical 30 yr fixed rate, full documentation loan is at 6.75%, expect a No Doc loan to be around 8%.    I will be happy to answer any other question regarding the mortgage in more detail for you even though I do not lend in your state.   Like Keycon said, there are lenders out there who could handle this situation.

My husband and I bought a biz one year out of college and ran into the same thing for the next 8 years.  Basically, if you are self-employed, you are treated as if you are UNemployed and must prove income in about 100 different ways.  We bought a Jeep because the Ford dealership sized us "20-somethings" up as not being able to afford an Explorer and turned us over so many times that we finally left and went down the street where the Jeep dealer was HAPPY to take our money.

The year we sold our business and my husband went to work for another company, I nearly cried when I went to get a car loan and they didn`t want 3 years of tax returns.  It was SO EASY vs. what we had been going through basically all of our adult lives (remember, fresh out of college).  That is the part I dislike about being self-employed (luckily my husband has a "real" job - HA!), you are treated like a welfare case by the banks. 

~Kim

Ken, are you a C corp, S corp, or LLC?

Ed

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Ed Gentile
Hunter Personnel
President
(O) 734-449-9444 x 22
(E) egentile@hunterpersonnel.net

www.hunterpersonnel.net

Thank you all so much for your support and advice. It is greatly appreciated!

Ed- Funny you should ask. When I first was looking into becoming incorporated I was counciled into becoming a C corp.  So I did. I am now learning and hearing that I probably should have gone with the S election. So to anwer your question, I am a C corp.

Best wishes to you all!