does anyone here know how someone can get a loan or financed to buy a home when you are unable to prove how much money u make...
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does anyone here know how someone can get a loan or financed to buy a home when you are unable to prove how much money u make...
Ahhh... the "Catch-22" of living on a cash basis. The first question you need to ask yourself is whether you WANT to "prove how much money you make." If you do, should be very easy, as step one is your tax returns, which will contain an admission of making X amount of money, such that you then paid taxes on same. For obvious reasons, is a reliable indicator, as nobody lists money they DIDN'T make and pays taxes on same. However, if you haven't been listing amounts you're now looking to prove you made.... well, think about what you're trying to do! Proving higher number to bank than you've reported to IRS is a very bad idea.Quote:
Originally Posted by myiah
Assuming you're declaring everything and are not worried about real numbers coming out, can prove up through a combination of bank records, tax returns, previous purchases, credit history, etc. Over long haul, if your objective is to prove earnings, buy everything through credit cards and zero at end of month - will establish both good credit rating and consistent amount of income on monthly basis. Lenders give much more weight to prior payment history than most people realize.
With all the independant mortgage companies out there nowdays (Everybody is a wanna be mortgage broker) its easier for "non-traditional" earners to qualify. Stay AWAY from Banks. 99% of all the loans get sold to the Govt. or to REIT's anyway so it makes little difference who actually initiates your loan. Small Mortgage Brokers are easier to deal with and more likely to accept questionable sources of income.
Wherever you find the money .....REMEMBER TO READ EVERYTHING and make sure you understand it. There is alot of "creative financing" out there that will come back to bite you later. Banks are just as guilty of this as are brokers so cover your own ass.
^ A mortgage broker is not a lender...they are the middle man between the customer and the bank. :rolleyes:
Now, if you have good credit (meaning 680+) you can get a stated loan or a no doc loan. You'll pay a bit higher interest, but if you go stated/no doc, the bank will "take your word" that you can afford what you are going to buy.
If you have diligently paid your taxes (and not just claiming $20,000/year) then you would be able to use your tax returns to prove your income. Banks prefer this anyways...BUT, if you have not paid your taxes...or if you only claimed baby sums...you will need to go stated/no doc. But, also be aware that buying a home...and not having the "income" to back it up will put you on the IRS radar which will most likely end in an audit and hefty fines.
And, yes, it's always good to have a lawyer look over your papers...and have an accountant tell you what you can do with what you've claimed...
Hmmmmm ... as much as I HATE to disagree with a Dancer ..especially one with Moderator powers......I gotta say this:
1. There are some BIG companies out there brokering mortgages. All brokers are not the shady middlemen you refer to with an "eye roll". Ever heard of American Century Investments? Its a billion dollar company started 8 yeras ago by a guy brokering home loans. :crying cause it coulda been ME:
2. 680 FICO is barely above average and is not considered (by a Bank) to be GOOD Credit. Thats closer to 750.
3. No-Doc loans are Urban legends. You hear about them and it seems possible but do you actually know of anyone who has gotten one from a BANK? I have but I was borrownig my own money (borrowing against a CD). Normal people don't get these.
4. Self Employment income (IC) is valued considerably lower (up to 30% lower mainly due to depreciation) then earned (W-2 based wages) Income by banks for loan repayment purposes (and REPAYMENT is what banks really care about. They dont wanna re-posses your house.
A decent Broker can make loans BASED around possibly having to foreclose because HE takes RECOURSE on the loan when it is sold. THIS is why a broker can offer lower rates and more "Creative" options. He DOES wanna reposses your house.
I thought I knew so much about mortgages too!
Ha, I know a little, but not the tricky stuff. I'm so glad I bought my house back in the pre-dancing days, because it's such a monumental pain in the ass to get reasonable financing now.
I know this is kind of a roundabout way of doing it, but what do you experts think:
-Get a fixer-upper...a modest one.
-Finace the rehab yourself (how you pay contractors, with legitimate or unreported income is up to you)
-live in it a couple of years while paying extra on the mortgage (this income MUST be reported). Ideally you'll make a huge dent in the principal, maybe even pay off the mortgage completely.
-sell it...take your equity (which has to be a lot to make this whole thing worth it) and move up.
I think if you start modestly and work your way up, you are less of a "red flag". You must also be filing some kind of tax return.
I know several developers who became rich doing this. One we all have heard of is Donald Trump. The end game is to live in one NEW house while you build another new house. Sell and move every 2 years to keep it as an "Occasional Sale"
Sweat equity is becomming more accountable nowdays. (Banks and the IRS didn't used to value sweat equity at all)
There are both framing and finish carpenters out there who PREFER to work for COD (Cash on Delivery) and these guuys may be illiterate ..(Oh they can read and write but the HATE Paperwork wink wink) These guys are usually hiding from child support and/or alimony so be prepared to accept the morality as well as he legality of the whole COD issue.
The things you CAN'T do yourself are Exterior Framing and major Electrical and Plumbing as these have to be inspected. Building in-spectors/city engineers are your worst enemy due to permits and the fact that they KNOW almost every contractor in your area. You CAN "Say" you hired these COD guys as a consultant and YOU actually did the work. Pay attention to what it says on the PERMIT because thats your paper trail.
Bottom line ...COD is a fact up to the top levels of construction. It happens and the IRS knows it. You think the "Cash under the table" gets reported when Rockwell gets a Govt contract to build Dune Camo Port-a-Johns for Iraq?
One hint: LOCATION LOCATION LOCATION. Buy the worst house in the best neighborhood and make it the nicest house in that neighborhood. Trick is to DO that before all the money goes to another neighborhood. GOOD LUCK.
thank you guys soo much yall have been a huge help
I never said all brokers were "shady"...I simply said that MOST brokers are the middle man between the loanee and the loaner.Quote:
Originally Posted by DJ_WuLf
680 is a GOOD credit score that most banks consider "stated programs" for. The higher your credit score is, then the better rate/programs you are apt to get.Quote:
2. 680 FICO is barely above average and is not considered (by a Bank) to be GOOD Credit. Thats closer to 750.
Normal people don't get No-Doc loans? Are you sure? I have a no-doc/stated income loan on my condo...I am in the process of refing and going with another no-doc/stated deal. I don't get loans from a broker...but a bank. A mortgage company.Quote:
3. No-Doc loans are Urban legends. You hear about them and it seems possible but do you actually know of anyone who has gotten one from a BANK? I have but I was borrownig my own money (borrowing against a CD). Normal people don't get these.
A bank will take the AVERAGE of the previous 2 years of W-2's OR your submitted tax forms to determine whether or not you have made enough money to justify getting a loan (if you go with a paper deal). If the amount of money you are claiming to have made conflicts with your liabilities (bills, etc) then you will get denied...however, there are a lot of things that go into the equation...not just W-2's/tax statements...but equity...type of deal...credit...so on and so forth.Quote:
4. Self Employment income (IC) is valued considerably lower (up to 30% lower mainly due to depreciation) then earned (W-2 based wages) Income by banks for loan repayment purposes (and REPAYMENT is what banks really care about. They dont wanna re-posses your house.
Well, in that state of Illinois, the term "broker" is used for companies/individuals who take your loan information and find a bank that will be able to loan based on that information. They are the "personal shoppers" so to speak. Your definition of a broker is completely different from mine...so that may be where some of the confusion is...Quote:
A decent Broker can make loans BASED around possibly having to foreclose because HE takes RECOURSE on the loan when it is sold. THIS is why a broker can offer lower rates and more "Creative" options. He DOES wanna reposses your house.
Either way...I was a broker for a while and a processor for a broker for quite a while...I have a little knowledge in this area.
In my experience, it's possible to get a no doc loan with a credit score above 630 if you have a lot of money down and money in the bank.
The real point here is having enough previously declared income to explain how you saved up a $20,000 down payment, plus having enough currently declared income to explain how you are able to make the mortgage payments and still cover costs of living plus any other car loans or credit card payments you may have. The minute a real estate title transfer takes place, the state property office registering the title change is going to report the sale to the IRS automatically. If the sale report shows a $100,000 house with the buyer putting $20,000 down and assuming a $1500 a month mortgage payment, IRS computers are going to cross-check tax returns to see if a level of income allowing the saving up of $20,000 plus the making $18,000 worth of annual mortgage payments on top of other costs of living (we're probably talking about a pre-tax gross income of at least $60,000) was previously reported by the buyer. If not, then stand by for an audit.