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Hey everyone! I have a situation that has popped up, and it is so intriguing to me that I had to run it by you for your thoughts (especially if there are any underwriters out there). Since I could ramble for pages about the entire situation, I will do my best to give you succinct facts instead.
1. As some of you know from my other entries around this site, I was laid off from my Director of Financial Systems position last March. The company for which I was employed made some poor strategic decisions and was forced to reduce a large portion of the G&A workforce, including my position.
2. From April through August, I ran a consulting practice, which paid the bills - quite well actually - while i searched for the ideal full-time position. I conducted my business as a 1099 contractor, as you would expect, and my wife carried our benefits through her work. I fully enjoyed managing my own practice and expect to eventually make that my primary occupation.
3. In September, my wife's office was closed, and she was also without work, so I needed to take on a full-time (W2) position in order for us to have benefits. My work is in Florida, so we moved here when my son was done with school in December.
4. A couple weeks ago we went under contract to purchase a house, and I just completed all of the necessary paperwork for my mortgage broker to send to the underwriter.
Here's where it gets interesting. My broker suggested that we not submit the 1099 income for consideration, but rather just the W2's, along with a letter explaining the employment gap - why I lost the job, how I searched for jobs, when I started the new job, etc. Never shy, I asked him why he would want to take that approach. His response was "I just hate having side business questions raised. It throws monkey wrenches into everything sometimes. I dont want the UW to make you have to file 2011 tax returns before closing...I dont want them to ask if the business is still operational."
Does this make sense to you? Is it better to demonstrate a history of work, with a noted gap in employment and income, than to show consistent income, with part of the work history dependent on consulting engagements?
Other relevant facts:
Credit Score - good to go, 813
Debt - None
Current Position Income - plenty (pmt would be about 19% of gross)
Current Cash Savings Position - enough for 20% DP + Close Costs + EF
Loan - 30-year conventional, nothing unusual
I am Married, but only my name (and income) on the mortgage
1. As some of you know from my other entries around this site, I was laid off from my Director of Financial Systems position last March. The company for which I was employed made some poor strategic decisions and was forced to reduce a large portion of the G&A workforce, including my position.
2. From April through August, I ran a consulting practice, which paid the bills - quite well actually - while i searched for the ideal full-time position. I conducted my business as a 1099 contractor, as you would expect, and my wife carried our benefits through her work. I fully enjoyed managing my own practice and expect to eventually make that my primary occupation.
3. In September, my wife's office was closed, and she was also without work, so I needed to take on a full-time (W2) position in order for us to have benefits. My work is in Florida, so we moved here when my son was done with school in December.
4. A couple weeks ago we went under contract to purchase a house, and I just completed all of the necessary paperwork for my mortgage broker to send to the underwriter.
Here's where it gets interesting. My broker suggested that we not submit the 1099 income for consideration, but rather just the W2's, along with a letter explaining the employment gap - why I lost the job, how I searched for jobs, when I started the new job, etc. Never shy, I asked him why he would want to take that approach. His response was "I just hate having side business questions raised. It throws monkey wrenches into everything sometimes. I dont want the UW to make you have to file 2011 tax returns before closing...I dont want them to ask if the business is still operational."
Does this make sense to you? Is it better to demonstrate a history of work, with a noted gap in employment and income, than to show consistent income, with part of the work history dependent on consulting engagements?
Other relevant facts:
Credit Score - good to go, 813
Debt - None
Current Position Income - plenty (pmt would be about 19% of gross)
Current Cash Savings Position - enough for 20% DP + Close Costs + EF
Loan - 30-year conventional, nothing unusual
I am Married, but only my name (and income) on the mortgage
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