All Forum Posts by: Eric Veronica

How much do you currently owe on the hard money loan? 

Based on your post you mentioned a purchase price of $120,000 with a renovation cost of $18,000. Assuming the hard money loan is $138,000. If my assumption is correct and you are paying off the entire Hard Money Loan and rolling in closing costs/taxes/prepaids there should not be any seasoning required because it would not be considered a cash out refinance. If you are just paying off the HML then it would be considered a rate and term refinance which does not require any seasoning.

If you own more than 25% of an S-corporation then you are considered self employed.  As a self employed person, whether or not you pay yourself a W-2 or not doesnt usually matter.  The overall calculation of the business income is what matters.  Assume a scenario  you own 100% of the business.  

Scenario 1 - business net income is 100k per year and you pay yourself no W-2

Scenario 2 - business net income is 50k and you pay yourself a 50k W-2 salary

Scenario 3 - business breaks even and there is no net income and you pay yourself 100k W-2 Salary

In each scenario your annual income is 100k.  It does not matter a how you slice it. (NOTE there are some additional additions and subtractions that go into calculating self employed income.  Also the calculation changes if you own less than 100% of the business)

Overall switching to a sole proprietor/schedule C business should not change anything.  At the end of the day the cash flow analysis calculation is almost exactly the same for an S-Corp vs to a schedule C/sole proprietor.  You do not need to show consistent distribution history because if your are self-employed because the tax returns will tell the story.  

@Tristan Romero If your income is under 80% of the area median income level you may be able to qualify for the homepossible program with as a little as 5% down.  

In more affordable markets this is an awesome conventional program that allows you to get in a multi unit with a low down payment.  My guess is that this may not be realistic in California since home prices are high. It is unlikely that your income will be high enough to qualify but low enough to be under 80% of  area median income. 

single family at 15% down shouldnt be an issue but 2-4 unit requires 25% down. 

Sure can. 

@Karan More if you are applying for a conventional mortgage you should be able to use rent from the home you are departing to offset the principal and interest payment. Typically most lenders will take 75% of the new lease and use that to offset the payment on your current primary.  

If you want an accurate answer they you need to provide the necessary documentation that the lenders are requesting. There really is no minimizing documentation if you want to get an accurate answer. Per your post you have variable w-2 income, an LLC, 10-99 and short term rental income. Each of those income sources require an extra level of calculation to determine consistency and whether any of that income is increasing vs declining.

If you are looking for conventional financing from a lender who does not ask for this documentation up front should be more of a red flag than anything else.   Believe it or not there are lenders out there who say yes to everything up front without actually doing the proper income calculations up front.  Instead they wait until the loan is in process and they let underwriting to all the calculations rather than vetting anything up front.  Its a lot better to iron out as many income questions up front before you have a deal in place rather than trying to solve problems the week of closing.  

Yes, the payment will count against your debt to income ratios. If your HELOC only requires interest only payments then only the the monthly interest payment will be counted against your monthly debts.

Hi James, 
Physician/Dentist Loans are typically limited to the purchase/refinance of a primary residence.  

If you are a new dentist who has just started your position or if you are looking to close on a home loan before you start your new position the lender will usually use only your base qualifying income.  If you are needing to use any type of variable production based income then the standard guideline requires us to use a 2 year average of that variable income.  Often times we can use shorter time periods to calculate variable income but you usually need some history before that income can be considered. 

We have a very competitive physician loan program so feel free to reach out if you have any additional questions. 

10% down on an second home should be achievable.  I just closed one last week in Michigan with 10% down.  Beware that within the last year or so Fannie and Freddie changed the rates/pricing on second/vacation homes.  The interest rates for vacation homes used to be nearly identical to the rates you would receive on primary residences.  Now vacation home rates are much more similar to investment properties.