self employed/not showing profit, I really need advice on what to do?

[smo65d11]

I am self employed 1099 for the past 20 months in the same field that I have worked in as a W2 for 13 years.  I have been trying to refinance my home and rental home but have had absolutely no luck with big banks, local banks, credit unions and standard mortgage companies. 

problems:

20 months self employed, they tell me I have to have 2 years.  Fine, say I wait 4 more months ...

I have declared a loss the past 2 years taxes because I write off a lot, mileage, home office etc.  Okay, say I have my accountant NOT write off some things so that I show a profit?

120 day late 2 1/2 years ago, 60 day late 2 years ago.  But nothing else bad on my credit reports, good utilization, 2 current mortgages, 1 car loan, several credit cards. 

Husband is not a US Citizen, but he is here as a "permanent resident alien"

Husband is a busboy (brings home more than me working 4 nights a week versus my 60 hours!), but some of the tips ($100-200 a week) are not declared. 

Good things:

FICOs in the 700-715 range

home I live in-$50,000 equity, current loan appx $70k, home value $120k

rental home- $250,000 equity, current loan appx $150k, home value $400k

Husband has been promoted to server, but it will be on a trial basis, so this is not a sure thing.  But he should be making $200-$500 on average a week more.

Is a Home Equity Line of Credit an option?  Is ANYTHING at all an option for me?  I thought working hard at getting my FICOs up over 700 would solve our problems, but that is nowhere near the truth.  It seems the only way that I can "get" help is to get close to foreclosure, and then get "bailed out", which is NOT how I was raised, nor what I want to do.  any advice please?

[Anonymous]

I am self employed as well and 2007's write offs left me in a bad spot for my mortgage application this year. I overpaid on taxes this year and didn't really write off anything in order to try to get a decent income on paper to please the banks. There's no way around that one. Don't forget they will take the last 2 years tax returns and average them, so you will need to have a much higher income for this year to compensate for the loss the year prior, etc.

Though,if you are in a financial bind and your rental property is worth so much, why don't you just sell it?  You could take the money from the sale of your rental and pay off your primary residence. Then you'd really be in a good spot. 

[Anonymous]

Was the 120 day late on a mortgage?  If so, a 120 day late shows the same to a lender as a foreclosure and requires I believe a 3 year minimum wait before buying.  Not sure if that counts for refi as well, but I believe so.  Also, in a nutshell, if you have no income, you will be hard pressed to find a loan right now.  Even if you had your accountant back out some of the expenses of this year's tax returns they would still want alst years and you would probably be stuck with a large tax bill obivously.  So even if you wait out the 24 months, you still have to prove income for those 24 months, not just the job history.  At best they would add the last 2 years and average that but if you posted a loss last year that would not do you any good.

Are the home values based upon current appraisals, or the purchase price and how long have you had them?

How much income do you actually have between your husband and you that is showing as reported income?

What other debts are there?

You have great scores and alot of equity, but without proveable income, loans are non existent right now for the most part.  SE and stated income loans died with the credit crunch/mortgage meltdown.

[smo65d11]

well, 2 reasons .... I inherited the house from my dad and there are a lot of sentimental ties to it.  Second, it is worth well over that amount, but the market is ... well .... the market!  I would think that right now is the worst possible time to sell?  I am trying to have that as my last resort.

[smo65d11]

I had an appraisal done a few months ago and knocked a few thousand off, so the figures are pretty accurate.

yes the late was on the mortgage on the rental house, my banking and address was screwed up so I was paying on a credit card rather than the mortgage, but GW are not working at all.

$15k car loan, and about $10k in credit card debt, with about $25k CL.

[Anonymous]

I could be wrong but I think the 120 day late disqualifies you from about any programs out there.  120 day late gets the same restrictions as a foreclosure.  That may not be the case on a refi but I think it is.  I think FHA requires 3 years and Fannie and Freddie require 4 or 5 before you can apply for any mortgage backed by them.  Check around to make sure on that.

Also, 10K in CC debt and a car loan will not help as they will hit you on the DTI for them.  What are the payments ont he CC debt and the car, as well as the payments on the 2 mortgages.

Lastly, what is ther terms on your current mortgage (interest rate, etc.)

[smo65d11]

My car payment is $338, and my credit card minimums are maybe $200 but I always pay more.

My interest on the home I live in is 10.025% $70,000, value $115,000, the rental house interest is 8.25% $150,000 value $400,000, which is obviously why I feel that I need to refinance! 

Message Edited by smo65d11 on 03-25-2009 07:24 AM