How to Respond to a Bank

[David Vincent]

I am in the process of refinancing (cash out) my personal home. I am almost done but the banks wants to know about my real estate business first.  I actually forgot to disclose that on the application. I buy and flip houses but the company has not actually made a profit yet. I am a minority share holder (10%). I do not want to write anything that hurts my chances or effect the refi.

How should I respond? Can someone help 

[Chris Mason]

Originally posted by @David Vincent:

I am in the process of refinancing (cash out) my personal home. I am almost done but the banks wants to know about my real estate business first.  I actually forgot to disclose that on the application. I buy and flip houses but the company has not actually made a profit yet. I am a minority share holder (10%). I do not want to write anything that hurts my chances or effect the refi.

How should I respond? Can someone help 

 <25% owner, they will not consider you "self employed." So I think you are fine, give them the paperwork documenting your ownership percentage as being below that threshold. 

Over that threshold, they would consider you "self employed" and hit you with the losses. Under that threshold, you're in the same category as all the Microsoft or Amazon employees that own 0.000001% of the company. 

[David Vincent]

Originally posted by @Chris Mason:

Originally posted by @David Vincent:

I am in the process of refinancing (cash out) my personal home. I am almost done but the banks wants to know about my real estate business first.  I actually forgot to disclose that on the application. I buy and flip houses but the company has not actually made a profit yet. I am a minority share holder (10%). I do not want to write anything that hurts my chances or effect the refi.

How should I respond? Can someone help 

 <25% owner, they will not consider you "self employed." So I think you are fine, give them the paperwork documenting your ownership percentage as being below that threshold. 

Over that threshold, they would consider you "self employed" and hit you with the losses. Under that threshold, you're in the same category as all the Microsoft or Amazon employees that own 0.000001% of the company. 

Thank you Chris, that was helpful.  One last thing. They also asked me to list out the all the repairs and debts I planning on spending the money on.  To give you a little background, my house was valued at 280k.  The appraiser came in and told me the house ended up appraising for 295k which increases my cash out. However, the bank does not know I know the house appraised for more. I am wondering if they are asking how much my repairs and debts are so they can limit the amount I take out of my home? FYI this is a Credit Union.Please advise and thank you in advance. 

[David Vincent]

@Chris Mason Thank you Chris, that was helpful. One last thing. They also asked me to list out the all the repairs and debts I planning on spending the money on. To give you a little background, my house was valued at 280k. The appraiser came in and told me the house ended up appraising for 295k which increases my cash out. However, the bank does not know I know the house appraised for more. I am wondering if they are asking how much my repairs and debts are so they can limit the amount I take out of my home? FYI this is a Credit Union.Please advise and thank you in advance.