when you’re getting a regular mortgage, it is my understanding they will look at your down payment, income, and credit history. assuming you weren’t worried about credit or down payments, but you wanted to quit your job and work in real estate. would that be a major problem?
my specific example is this: i work at a job making ~30K annually, where i’ve been for 3 years. i think i can transfer my job to where i want to move to begin investing, and then i would have this provable income, which would help me getting loans.
but, i want to quit this job and work on real estate related things (for experience reasons, things like sales, management, construction, etc etc etc). i’m afraid that if i quit my job before moving, and get a new one, i’ll have two potential problems:
first, i will have zero tenure at my job
second, i may end up making less at the new job
how much of a setback will that be, if i quit my current one to go for something realty related? i know it is better for my goals to get a more flexible, educating job than my current job (retail), but i don’t want to screw myself when it comes time to get the loans.
Well if you have excellent credit you can alway go NO DOC but will probably need downpayment money of 5 or 10%… Also there are many brokers out there that for a fee, have CPA’s that will state you are self employed and create a letter for the bank and when its time to verify they will do it thru them… I never done it, but my friend had horrible credit, his wife didnt work but had a 780FICO, so they did a stated loan in her name only. He could not be on loan with mid 500 FICO…they paid the guy $500 and it was worth it.
It’s comments like that, that make me understand two things. One why I am a part of the most hated field in the world, and two, why it’s hard for me to get business sometimes, lol. If other Loan Officers are doing that stuff.
not sure how your post really helps me tho, even if it were legal. i mean we both have great credit, over 750.
my problem, my worry, is that if we drop our retail jobs, where we’re managers with ~3 years of tenure at the same place, for slightly lower paying jobs, banks will say “hey, you guys have only been at that job for like 2 weeks, that isn’t a long enough history for us to depend on that money for your payments. come back when you’ve been there a few months, or 6 months.”
that’s what i’m afraid of. i want to drop my 40hrs/week in retail, for maybe 30 hours doing somethign that i can learn realty from (constructing houses, manning the desk at a realty agency, whatever). i just can’t do this switch if it’s going to stop people from loaning to me.
if i just had to pay a few % higher on a down payment, that wouldn’t be the end of the world. i could deal with that easier than tryign to keep my retail job
If you are going into the same field it wont be an issue. Example, you are a currenly a sales manager for a retail store, and you are moving into being a salesman for something else. Different job, same field. It becomes next to if not impossible if you got into a completley different field because lenders want to see two years. Exceptions can be made, but it’s not the norm. So unless you are going into the same field, or you granduated college with a degree pertaining to the field you are going into, then it’s going to be hard if not impossible. Sorry to be the bearer of bad news, but thats the way the cookie crumbles.
Not entirely true. Sales isn’t just sales. If you go from retail sales to say, selling copiers, it’s not the same.
Furthermore, going from retail to say, construction doesn’t pose a problem as long as it’s full time or guaranteed income. If the hours are varied then a full VOE from your current employer stating the number of hours you are going to work is what u/w will use to compute income. If you are hourly then the base income can be used from day one on the job as long as you have a stable work history in the past. Of course they won’t average income or use previous income since it is in a differnt line of work but the new employment does not require a 2 year history on that particular job unless you are attempting to use commission / bonus / overtime income to qualify. Base income can be used from day 1.
Hhmm…perhaps I need to find some new wholesale lenders then. None of the lenders I use will accept that. If the person has no experience in the field, they want 2 years history. The end. And on the other side, sales is sales to them. LoL. Funny how different people have experiences. But yea, from my day to day grind, thats how it break down.
damn, one person’s answer makes me smile, another sucks haha… guess it depends on lenders then, or maybe just on specific scenarios.
my current job is managing a retail store, one that is in most malls in this country…
i’ve been there for three years, my employment histories are pretty solid given my age (23), and i’ve lived and paid rent without problem for 3 years at the same place, so i’d say i appear to be a safe bet, but i’m just worried they’ll figure i may not do as well in a new area with a new job. i mean it is a new situation, so it could go either way in their eyes, but my history should hopefully help.
assuming they didn’t like the short time at a new job, any other ways to remedy the situation? like higher % down, higher i rates, points up front, something else? would a co-signer alleviate this (god i can’t believe i just asked that)? i need to learn more about how hard money works, that may end up being a viable option.
DFW…i never said I did that. I do my loans all stated or No DOC…depending on the property and rate at the time. LIke many investors, after awhile Full doc goes away…
Now this is something that 2 brokers purposed to my friend when he was house shopping… And I know of several others that do the same thing…
But lets talk umm illegal…a stated loan is in fact ILLEGAL when your LYING about your INCOME…humm…I make 45K a yr but since I so much in debt., the house payment will be $2000K month and I get money from elsewhere(side jobs which I do not declare the income to Uncle Sam) I will state I make $80K a yr…Oh the mortgage broker i will make it work because I am in sales so the salary can really have a broad range when using the mysalary.com site or whatever it is…I mean waiters making 90K a yr…very few…but hey brokers will do it…
So before you say its all illegal…think about the stated loan…Its more general purpose I feel was when a couple is married and one has bad credit, but 2 family income you sorta bump the income up alittle but didnt they over the last several yrs get tougher on the so called bumped incomes to say, HEY it must make sense…
People who do everything by the book are among the biggest thieves…they are doing stuff wrong too but convienced its right…
You make me out to be a fraudently investor…I am just getting cashback deals…Oh wait…the developer sold about 2000 units the same way over 6months…damn…the federal jails are gonna be full now…here comes all of South Florida, tampa and orlando investors…
For rehabs…i am getting the seller to kickback the money from his proceeds…not illegal…he got what he wanted. Consider it a free loan from seller if you want. I am not lying on the appraisal…place still has equity… damn brokers are among the biggest thiefs in the industry along with car saleman since they all lie to get the ghetto boy making 400a week into a Chrysler 300M with an $700 month payment…
‘Bumping Up’ your income on a stated doc program is indeed fraud. Getting cash back from a seller, despite it being what he wanted, that is not disclosed to the lender is fraud. You can call it whatever you want, but the fact remains that it is fraud by ANY definition you want to use.
I do not know you from Adam, but based on what you have written on this message board, I do consider you a fraudulent investor. You want to use a person’s income without their credit (in your example of the married couple)? That’s fraud. There are plenty of people who have the capacity to pay (income) but not the willingness to pay (credit profile). These people are terrible borrowers. To use their income and another persons credit is fraud in every sense of the word. It’s similar, although not exactly, like the ‘straw buyer’ scheme that has many people in jail.
So changing income on a stated loan is fraud… So why have stated loans, just make them all full doc…
Also are you a loan officer?? what happens when you have one spouse with strong income and bad credit and the other excellent credit and low income?? Do you go stated with the excellent credit borrower??? I am wondering…
Oh, i never did that with lending using a letter… But lets go further into lending practices that brokers use. Self employed business owners…All that is required for stated loan is a letter from there CPA stating income…GEEEE…i am sure if your a L/O you have done these for your clients?? I am sure all L/O have done them. I am sure all L/O have stated enough income to make the loan work on stated loans…Hummm…if you have not, then you would definitely have problems closing loans during the boom we just had…how many people bought 500K+homes making under 100K a yr…I know in SoFL, avg income is around 56K a yr, but yet avg SFH is about 365K…DTI doesnt work there…
My loan apps may have a stated income to close the loan, but it also reveals my assets as true to the bank. I never have a problem being asked to have assets verified. And yes…getting cashback from a seller is like paying extra interest on money, but also real estate investing is about leverage as well and if you can leverage the money to make more, its ok… Reality it, i can go out, buy for X amount dollars and then get a refi and pull out money since there is equity…but gee…the mortgage broker will again hit you for 3-5% in closing cost… Now thats a waste of money in my opinion…Hit you on the front end and the back end of the loan…
the real issue, is what kind of rate are you going to get and thus pays back into the calculation of whether its a worthwhile deal. various lenders have all kind of variations in their underwriting rules; you have more ability to shop if you have strong income (esp W-2), assets, downpayment and high credit. the more money you pay in debt servicing, the less goes into your pocket.
as for stated income loans, it does NOT mean pcik a number that works for the deal. If I recall correctly, you still sign a IRS 4506T which always the lender to pull your tax returns.
Also, all loans are audited 4-12 weeks after they close. If they go to FreddieMac or Fannie Mae to be bundled and securitized, then they are audit by those organizations. How do I know this? My brother spent several years at Freddie Mac doing this job.
No, I’m not a loan officer, I’m an underwriter for a wholesale mortgage lender.
There are plenty of reasons to go stated. If your credit is excellent then why should a lender have the same documentation requirements that they would for a sub-par borrower? Lenders lend money based on RISK. A borrower with excellent credit presents a lower risk. With that lower risk you can either balance that with loose documentation requirements and a similar interest rate, or tighter documentation requirements and a lower interest rate. That keeps the risk / return balance.
Self employed borrowers often go stated because they don’t want to disclose their business dealings, and if their credit is good enough, they shouldn’t have to. There are people out there that really and truely do make more money than they can paper trail. The stated program isn’t to lie to get what you want, it’s to avoid having to document everything based on your strong credit history.
Changing the income to suit your needs is fraud. I am not sure why you have such a difficult concept with the fact that LYING is fraud.
AAK5454 is correct, stated programs still require you to sign the 4506-T which authorizes the lender to pull tax return transcripts for up to 4 years. If you pay your payment on time, chances are they won’t pull the returns because the lender really doesn’t care as long as the loan performs. If, however you are late within the first 180 days (up to 3 years in the loan they can do this, I use 180 days because that’s the early payment default window that lenders are judged very critically on, it can extend up to 12 months with some investors), the lender will pull the returns and if your ‘stated’ income does not match your filed income, the note can be called due and the broker that originated the loan can be fined / go to jail / lose his license.
Creditors / Lenders are afforded a great deal of protection from the government regarding the lending process. For instance, even if you have a court ordered divorce decree that states your home goes to your ex-spouse and you are no longer responsible for that debt, if your spouse doesn’t pay and you’re still on the note (i.e. she didn’t refinance you off the note) the LENDER can come after you for the money (albeit you wouldn’t pay, you would just let them foreclose, but you’d have a foreclosure on your credit). Those court ordered documents hold less water than the security instrument you signed. The United States Government has long been pro-business, and as it pertains to fraud, is very anti-consumer.
I am pretty much done with the discussion and sure you are too… it gets no where. My main point is, if it is such a major concern in the banking world, it would be monitored and made very public to prevent it. It is not. We all know rules were made to be broken. Fraud is the same as breaking a law… Speeding, roll stops, eating a grape at the supermarket and not paying, taking the wrong change from cashier (theft with deception), many things… We all live our lives where we cut corners you can say to make things go smoother. its a way to get things…
Oh and i know not all stated loans require the 4506 form, i asked my broker since i never do those anymore. Guess it goes on the lender your shopping to and the guidelines. It is possible to not have it pulled. Its a shame b/c we all know brokers are sales people too and they need to close loans and have to put the checks in the wrong boxes sometimes, its how america works i hate to say… Remember, no such thing as an honest policitians…
can you explain this 4-12 weeks later auditing? if i got a loan based on us both having jobs, but we quit shortly thereafter and got new /lower income jobs, would they try to take the house back or soemthing?
and to the two of you arguing, plz just make a new thread or let it die. neither seems to be convincing teh other and you’re hurting my thread with a discussion that really isn’t that relevant to my question