Denied in Irvine - need a lender

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gasjockey_IHB

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My wife and I have been renting for 2 years now since we moved back to California from the midwest. I put in an offer for a house today in Irvine which is new construction. I spoke to the in-house lender and she said that we could not qualify because I dont have 2 years history of income as a sole proprietor. My wife and I are both physicians with a combined income of over $600k / year and a credit score of 803. We wanted a 30 year fixed jumbo in the amount of $850k. I went from being an employee with my old group to being an independent contractor for the tax advantages an S-Corp has. This was 8 months ago. Therefore I dont have the requisite 2 years of continuous income in my S-Corp that is standard for most mortgages even though the only thing that has changed about my work is that I went from a W2 to a 1099 at the same hospital. My wife also is an S-corp and will have 2 years income as a sole proprietor as of this coming July.



Does anyone know a lender that will work with us? Give me their number! Thanks!



GasJ
 
Given the $$ you say you make, why not wait a few months will fill your piggybank full of down payment $$$ making it impossible for them to refuse you?? The house is going to be there later this year, and perhaps all next year.
 
gasjockey, if it is just employee to independent contractor, you should be able to make a case with the lender. I highly suggest to deal with a direct lender directly instead of using a "broker". Builder in-house lenders are all brokers. My wife and I had a similar but not exact situation, and our bank was able to resolve the issue. For professionals (MD, DDS, etc), banks will consider your income as long as you are in the same line of work with continous employment history. I have PMed some additional information to you.
 
I totally agree - don't get caught up with what a "builder's lender" (aka just a broker) tells you. I've been looking at buying a home and have gone round and round with these brokers... and to be honest, they cannot even offer competative rates. (Although they are nice people - just in case they are reading this). If you and your wife are doctors, then your not short on brain power... look around, deal with a direct lender... perhaps look at the rates offered by various credit unions that you may be a member of, or qualify for membership in. Just an example, the credit union that I am a member of is able to do a mortgage for about 1.25% less than the builders mortgage broker for the model of home that I have been considering... which on the type of mortgage you are considering, amounts to $500-600 month! Or in doctor parlance, enough for a nice dinner once a month.



Search this site - it is a wonderful resource that I first discovered well over one year ago. There are all sorts of helpful hints about lenders, mortgage rates, and perhaps most importantly, how, when, and how much will prices on homes in Irvine decrease.
 
Here in Florida, I am running into people who never were

turned down before, being turned down.



Wait a few months, visit other lenders, as suggested, and

save up another 25-50 grand.



The price of the house you like may even come down a

bit.



Could it be that tho your income is stratospheric, your

school loans are stratospheric too? A newbie dr, son of

one of my best clients owes over 300 grand on his school

loans. Crushing.



I think lenders are just reluctant to loan, because they actually

have very little money to loan, since the pipeline shut down

last Aug 9. They also really don't like jumbos, and the things

that were supposed to help jumbo buyers that have been added,

really haven't.



If you use a non builder approved lender, make sure you have

an atty review the contract. In Fla, at least, there are punishments

in the contract, for not using their lender. May not apply to

California, which has a very different system,

but wouldn't hurt to have an atty look at it.



And one last thing. In Fla, drs have the reputation of being very

foolish with their megabucks. They are so busy, they think

they can either hand off financial management to someone

else, with no supervision, or are so smart they can do it

themselves. Then they lose lots of money.



You haven't mentioned interest rates. What kind of rates

did they offer?



What was your loan to value ratio? How much downpayment?

What was your total debt to value ratio?



If you'd care to share; we don't know who you are, anyhow.
 
[quote author="lawyerliz" date=1210547329]Here in Florida, I am running into people who never were

turned down before, being turned down.



Wait a few months, visit other lenders, as suggested, and

save up another 25-50 grand.



The price of the house you like may even come down a

bit.



Could it be that tho your income is stratospheric, your

school loans are stratospheric too? A newbie dr, son of

one of my best clients owes over 300 grand on his school

loans. Crushing.



I think lenders are just reluctant to loan, because they actually

have very little money to loan, since the pipeline shut down

last Aug 9. They also really don't like jumbos, and the things

that were supposed to help jumbo buyers that have been added,

really haven't.



If you use a non builder approved lender, make sure you have

an atty review the contract. In Fla, at least, there are punishments

in the contract, for not using their lender. May not apply to

California, which has a very different system,

but wouldn't hurt to have an atty look at it.



And one last thing. In Fla, drs have the reputation of being very

foolish with their megabucks. They are so busy, they think

they can either hand off financial management to someone

else, with no supervision, or are so smart they can do it

themselves. Then they lose lots of money.



You haven't mentioned interest rates. What kind of rates

did they offer?



What was your loan to value ratio? How much downpayment?

What was your total debt to value ratio?



If you'd care to share; we don't know who you are, anyhow.</blockquote>


Can you specify the "types" of punishments you are referring to? That's good to know to be on the look-out for such stuff, but what can they do? eg. Higher price?
 
Contact a local atty.

Contact a local atty.

Contact a local atty.



We have a different system in Florida.



but our developer contracts often say that if you don't

use the approved lender, it turns into an all cash

closing. Which means that you lose your deposit if

you don't qualify, and also, they often pay certain closing

costs if you use their lender.



YOU HAVE A DIFFERENT SYSTEM.



Another thing to check for is what happens if you have a

financial disaster inbetween the time you sign and the time

the house is ready. Often the Fla result is that tough, it turns

into an all cash closing andyou lose your deposit.



Consult a local atty.



Have you read your proposed contract? Slooowly and carefully,

with yellow marker. Also, all the conditions of the HOA?



You didn't answer my questions.



Put as little down as you can get away with.
 
[quote author="gasjockey" date=1210509025]My wife and I have been renting for 2 years now since we moved back to California from the midwest. I put in an offer for a house today in Irvine which is new construction. I spoke to the in-house lender and she said that we could not qualify because I dont have 2 years history of income as a sole proprietor. My wife and I are both physicians with a combined income of over $600k / year and a credit score of 803. We wanted a 30 year fixed jumbo in the amount of $850k. I went from being an employee with my old group to being an independent contractor for the tax advantages an S-Corp has. This was 8 months ago. Therefore I dont have the requisite 2 years of continuous income in my S-Corp that is standard for most mortgages even though the only thing that has changed about my work is that I went from a W2 to a 1099 at the same hospital. My wife also is an S-corp and will have 2 years income as a sole proprietor as of this coming July.



Does anyone know a lender that will work with us? Give me their number! Thanks!



GasJ</blockquote>
I'm with buylow, just take the 4-6 months at the income you stated to save up to a 20% down. There are more houses where that came from...and prices will slightly go down for the next few months.
 
Personally, with income like that, I'd save for a few years and buy in cash. Everything will be at least 20% lower at that point, or at the very least, I'd rather have the money in energy stocks than a house in the meantime.
 
If you are physicians you should just be able to provide your 1040 tax returns, and your licenses, perhaps a copy of a diploma. Attorneys and Doctors are considered professionals and should not have a problem whether they are independent or work for a health care provider/law firm.
 
Thanks for all the advice so far. I do have the 20% to put down. However, it seems that it's standard that you have to show that you have not changed your employment status for two consecutive years. I even called Countrywide directly to see if they could do it. Of course they said they have to have a federal underwriter review it and see if they can make an excetion. Anyone have an underwriter in their back pocket?



GasJ
 
[quote author="gasjockey" date=1210578213]Thanks for all the advice so far. I do have the 20% to put down. However, it seems that it's standard that you have to show that you have not changed your employment status for two consecutive years. I even called Countrywide directly to see if they could do it. Of course they said they have to have a federal underwriter review it and see if they can make an excetion. Anyone have an underwriter in their back pocket?



GasJ</blockquote>


You may or may not have noted that Countrywide isn't the most competative company in the mortgage business these days... just take a look at their coverage on CNBC.. or here for that matter... not exactly the best place to go when the company is trying to stay afloat... search around!
 
I sent a PM with a couple of names for you...



Also, for the other doctors out there - STAY AWAY FROM THE BOFA DOCTOR LOAN. It is intended to be used by "greenhorns" with huge med school debt and entry-level income. They give a terrible rate accordingly, and many just assume that this is a top-tier offering just because it has "doctor" in the loan product title.
 
Let me tell ya a story....



I have been keeping my eyes open and I have enough cash to purchase a home outright. Well in looking at some of these homes, I applied with a few brokers. Almost everyone said I had not been in my job for more than 2 years (yes, i am a enigneering contractor....). I mentioned I was not interested in a loan, I wanted to purchase and showed them the appropriate documentation. Still woulden't let me go.... there loss, now are almost begging me to purchase it....



goodluck

-bix
 
[quote author="biscuitninja" date=1210648673]Let me tell ya a story....



I have been keeping my eyes open and I have enough cash to purchase a home outright. Well in looking at some of these homes, I applied with a few brokers. Almost everyone said I had not been in my job for more than 2 years (yes, i am a enigneering contractor....). I mentioned I was not interested in a loan, I wanted to purchase and showed them the appropriate documentation. Still woulden't let me go.... there loss, now they I see them almost begging me to purchase it....



goodluck

-bix</blockquote>


They didn't want to tell you the truth bix. They just don't want some mad scientist blowing up stuff in the backyard for fun... Too much hassle for the HOAs.
 
The "perception" is "professionals" are more credit worthy than non professional in the eyes of lenders. MDs and DDS can quite easily get a loan to start their practice. Many lenders are willing to lend you money for the building you are in also.



But it is very hard to get a loan to fund an "engineer" practice. It is all about default rates. "engineers" are NOT considered "professionals".
 
"engineers" are NOT considered "professionals"



ok. Don't blame me the next time an earthquake hits and your house falls on your head. :)
 
[quote author="irvine123" date=1210671270]



But it is very hard to get a loan to fund an "engineer" practice. It is all about default rates. "engineers" are NOT considered "professionals".</blockquote>


I am laughing so much at this statment.... I've known MANY engineers who left engineering to become doctors. They've ALL said, "it was much easier".... Something to the tune of , "...it was alot less brain power ....".



I just find it funny. 99% of the people here in the OC don't look past the intial information and usually it burns them. Oh well, not my fault you didn't practice due diligence.



good luck

-bix
 
biscuitninja, I agree with you that being a good engineer requires a lot more brian power than being a good engineer. But "preception" is what is at play here. This is just one of those things, like it or not.



IN regards to default rate, the default rate for medical / dental practice is less than couple % according to the banks. I don't think the banks track default rate on engineering practices.
 
I was in a similar situation 2 years earlier being self-employed for a short period of time I did not fullfil one of the loan application technicalities. The bank wanted to see consistent and steady income. The only way for them to gauge that is duration of employment at the same place guaranteed by the employer. Their comments to me was economy could affect my earning and that would be a risk factor for not making a jumbo loan mortgage payment. Obviously the retard that process your loan did not have the proper education to even recognized certain professions are completely recession proof.





[quote author="gasjockey" date=1210509025]My wife and I have been renting for 2 years now since we moved back to California from the midwest. I put in an offer for a house today in Irvine which is new construction. I spoke to the in-house lender and she said that we could not qualify because I dont have 2 years history of income as a sole proprietor. My wife and I are both physicians with a combined income of over $600k / year and a credit score of 803. We wanted a 30 year fixed jumbo in the amount of $850k. I went from being an employee with my old group to being an independent contractor for the tax advantages an S-Corp has. This was 8 months ago. Therefore I dont have the requisite 2 years of continuous income in my S-Corp that is standard for most mortgages even though the only thing that has changed about my work is that I went from a W2 to a 1099 at the same hospital. My wife also is an S-corp and will have 2 years income as a sole proprietor as of this coming July.



Does anyone know a lender that will work with us? Give me their number! Thanks!



GasJ</blockquote>
 
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