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Member
cdg81smu
Posts: 9
Registered: ‎04-04-2012
0

Need Advice!

I applied for a mortgage loan with FGMC and finally received an update after my file was sent to underwriting for approval. This was the email that I received...

 

"Your file was denied by my underwriting department.  After reviewing your tax returns they noticed that there was about 10k in unreimbursed business expenses which we can’t use as part of your income.  Once the change was made to you monthly income to reflect this loss your debt to income ratio became way to high for us to be able to get an approval."

 

I emailed back explaining that I work from home quite often and was advised by a tax preparer that I can write off all things used for my job when I work at home, such as my cell phone bill, utilities, and internet service, etc... If I knew that it would cause me be denied a mortgage loan I would've done things much differently. I'm wondering now if I should amend my 2011 tax return or should I try to go with another lender? I currently make $42k annually and my credit scores are as follows: EX 657, TU 594, EQ 584. It appears that everything else was fine with underwriting it appears but this issue. The loan officer submitted the loan for $150k. I have several student loan that are all in deferment and a car note of $516 that has less than 12 payments. I have no credit card debt or any other revolving debt. Any help is greatly appreciated!!

Senior Contributor
Booner72
Posts: 3,889
Registered: ‎05-24-2011
0

Re: Need Advice!

Do you know your DTI?  If not, call that lender and ask them what they determined your DTI to be.  If you can calculate differently so it is lower, then yes, look for another lender.  What kind of a loan are you going for?  If FHA, then there are guidelines from both FHA that have to be followed.  Let us know your DTI ratios.

STARTING: 11/24/10 EQ-584 EXP-648 TU04-595
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Member
cdg81smu
Posts: 9
Registered: ‎04-04-2012
0

Re: Need Advice!

I'm going for FHA loan... I just emailed the loan officer to find out what they calculated for my DTI.

Contributor
maygirl
Posts: 87
Registered: ‎04-24-2012
0

Re: Need Advice!

Please let me know what you found out! We are going to have the same issue if they go by the tax return not the w2!! My husband isn't going to be on the loan and it was his business that showed a loss, but it brought our income down like 10k.

I asked my mortgage guy just now if they go by W2 or tax return...

Member
cdg81smu
Posts: 9
Registered: ‎04-04-2012
0

Re: Need Advice!

I certainly will! I've emailed my loan officer to ask if amending my taxes is an options. Keeping my fingers crossed! Are you going through the same mortgage company?

Member
cdg81smu
Posts: 9
Registered: ‎04-04-2012
0

Re: Need Advice!

According to the LO my DTI is a 40.3/66.8 right now. 

 

He stated "The advantage to being able to write off your business expenses is that you don’t have to pay as much in taxes, the trade off is that when you apply for a loan that money can’t be counted as income if you claimed it as an expense." I'm trying to find out if I should amend the tax return and simply pay more in taxes or just wait until next year to reapply for a loan...

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FrugalRican
Posts: 2,876
Registered: ‎02-02-2012
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Re: Need Advice!

Personally, if I could wait a year, I would.

It'd give you ample time to try to get those scores up and to save up on the DP.

 

And to correct the income/expense debacle for this tax year.

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Member
cdg81smu
Posts: 9
Registered: ‎04-04-2012
0

Re: Need Advice!

Thanks! The good news is that I'm in no rush...

New Member
SB913594
Posts: 6
Registered: ‎05-04-2012
0

Re: Need Advice!

Also check with your LO to see if your car payment will still be included once you have less than 10 payments left ( I don't think it counts but could be mistaken).  That should free you up some at least.

Valued Contributor
rckstrscott
Posts: 2,660
Registered: ‎04-25-2011
0

Re: Need Advice!


maygirl wrote:

Please let me know what you found out! We are going to have the same issue if they go by the tax return not the w2!! My husband isn't going to be on the loan and it was his business that showed a loss, but it brought our income down like 10k.

I asked my mortgage guy just now if they go by W2 or tax return...


They go off your tax returns and tax transcripts from the IRS -- W2 can be fabricated, IRS transcripts cannot.

 

I claimed the loses of my side business last year, and it did come back to bite me a little on the DTI/Income side..

 

-scott

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