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Updated almost 4 years ago, 02/26/2021
Lender recommendation for weird financial situation
Looking for recommendations on a lender who can handle somewhat odd financial situations. My wife and I quit working November 2019 to travel the world for a while then came back during COVID shutdown. We are both working again, making more than ever and have enough cash to outright buy a property but have a big gap in income that a traditional lender wouldn’t be okay with. Any good portfolio lenders that would be able to make that work with an owner-occupied loan?
Some will probably reach out to you on here.
My best advice is to call around and see what different products different lenders have. If your new work is w2, all the better!
- Dan Maciejewski
- [email protected]
- 727-288-7325
@Dan Maciejewski
It is W2, which will be so much easier than before when I was 1099. My concern is that on paper we have had a massive drop in income in 2019 and 2020 even though we made more during the time we were working and will continue to make more into the future.
@Nicholas Earls
There are definitely products that can use bank statements and employer letters, or at least there were recently.
My guess is that you'll have more luck with direct lender originators, but some mortgage brokers do have great connections.
Just remember that they like to say things "don't exist" if it's something they don't do. Don't get discouraged -- keep calling! Just call one or two a day and see if they can help your situation.
Different lenders have different products and not everyone only sells to Freddie and Fannie.
- Dan Maciejewski
- [email protected]
- 727-288-7325
@Nicholas Earls @Dan Maciejewski I'm throwing in a sub-question here because I am in a similar situation. Would lenders look at Nicholas' situation differently if he purchased a property outright in cash, and then went to put debt on it? It seems like a much different conversation if you approach a lender asking for a 70% LTV loan on an asset you already own and you're willing to put up 6 months debt service reserves.
Unfortunately, no. Even if it's producing enough income to pay for itself, they will want a personal guarantee which means you need to make enough income.
A commercial loan may be different and based entirely on rent rolls, but it will have a much higher rate.
It's always best to call them and explain your situation and see what they have for you.
- Dan Maciejewski
- [email protected]
- 727-288-7325
@Dan Maciejewski Thanks Dan! I'm assuming this all changes when you go to a local credit union that lends its own money. They can make their own rules since they are not selling a Fannie/Freddie product.
@Matthew McMenamin Correct. A direct or portfolio lender will have leeway. That's why you've got to calla bunch!
- Dan Maciejewski
- [email protected]
- 727-288-7325
@Nicholas Earls I wouldn’t totally give up on that traditional mortgage yet. I have a guy who is able to help out a bunch and helped me get a trad mortgage when a lot of lenders were like “sorry”. Might be worth a shot? PM me and I’ll introduce ya!
@Nicholas Earls
I’m confused. You’re a w2 income earner and earning more than you did before as a 1099 worker. In the same industry, I assume. What is the issue with the lender? Trying to help but not getting a clear picture. Thanks!
@Jinhee Hann
Lenders are usually looking at year over year income. Our income has decreased for the last two years since we were traveling end of 2019 and early 2020 plus COVID shutdown. Once we started working again we were making more but that won't be reflected on income statements and taxes until next year. And even though we are w-2 our income is somewhat variable because it is commission based.
I see. That’s the reason. You’re commissioned. Makes sense now
Originally posted by @Jinhee Hann:
I see. That’s the reason. You’re commissioned. Makes sense now
Even if not commissioned lenders don’t like to see earned income going down over time.
Yeah true. I’ve been doing loans for 20 years now and I was just puzzled and wanted to help you lol.
now that I see you’re in TN, I’ve been thinking about buying a stvr in Gatlinburg. What are your thoughts?
Originally posted by @Jinhee Hann:
Yeah true. I’ve been doing loans for 20 years now and I was just puzzled and wanted to help you lol.
now that I see you’re in TN, I’ve been thinking about buying a stvr in Gatlinburg. What are your thoughts?
I'm actually up in Indiana now but I was in central TN before. Gatlinburg is on the far east side of the state so a few hours away from where I was at. I've been to Gatlinburg several times but I don't have any experience with investing in Gatlinburg but I know you can do pretty well with it. That area is actually holding up pretty well with tourism during COVID because there are a lot of little cabins up in the mountains so you can social distance well there while enjoying the mountains.
Sorry yeah you’re in IN, not TN!
Thank you for the response. I’ll keep researching!