problems refinancing 2 homes

[Anonymous]

I own my home plus an investment property.  I have a subprime loan on each property (1st Mortgages only, no seconds or home equity line).   My home is valued appx $120,000, loan appx $70,000 at 8.125% which I live in, I've had the loan for almost 2 years.  The investment property is valued over $400,000, loan appx $150,000 at 10.25%, I've had that loan for almost 3 years. 

When I took out the loans my credit was a mess with a couple of old collections and a tax lien from 10 years before when my ex-husband didn't pay his taxes, and the 2 collections had been sold over and over, and I only had one maxed out credit card, no car loan, no other mortgage history, etc, but it is all now clean after a lot of work, sacrafice and cleaning up. My credit is now over 700, I have been trying to refinance the homes and have hit a solid brick wall because I am self employed for less than 2 years.

Any advice for where to look or what to do?  I have gone to a big bank, a small bank, a regular mortgage company and a mortgage broker, and they all say the same thing.

[DallasLoanGuy]

Think about it... the lender wants to know that your self employment venture will work out for you. They have set a 2yr history as a benchmark.

How long have you been self employed?

Also, remember.... write-offs reduce your income. So, when that 2yr mark comes around, you will be using income AFTER deductions. (think: cake & eating it too) 

[Anonymous]

well, I've worked for the same company doing the same thing for 15 years, but when I moved to a different state, my new boss hired me as an Independent Contractor.  I didn't think it was a big deal at the time, but now it is. It is just agravating! 

[ShanetheMortgageMan]

With conventional most lenders are absolutely sticking to the 2 year requirement of being self-employed (which being 1099'd is as you have realized), however FHA can make the exception when there is between 1 and 2 years of self-employed if and only if there was a 2 year history of being employed in that same field/industry directly before going self-employed.  I've tried this recently and have been shot down, but only because there hasn't been 2 years of tax returns filed, not because self-employment was less than 2 years.  So if someone began self-employment in 8/07, filed their 07 & 08 tax returns, and here it is in 2/09 less than 2 years later... an underwriter said that would be acceptable.  It's all case by case but that's what I have encountered.

[Anonymous]

what type of lender should I be contacting then?

[ShanetheMortgageMan]

A lender that offers FHA and would be open to discussing your situation with an underwriter before requesting you pay for an appraisal.

[Anonymous]

this was the answer that I got today from a lender ... any advice? 

I have checked with underwriting and unfortunately am not going to be

able to help. Right now with the late payments on the credit report and

a loss shown on the returns, a refinance would not be possible.

When you get your 2008 returns done and if they show income, let me

know.

[ShanetheMortgageMan]

Sorry for the delay, been real busy with work and was out of town.  Sounds like you had a net loss in 2007, is that right?

[Anonymous]

yes, I raised the rent December 2008, but am afraid the rest of the year will show me at a loss again for 2008 taxes.  I just am so frustrated!