Help two love birds find their nest.

August 29, 2010 8:44 PM

My life partner and I are interested in buying a house together. We both have excellent credit but low incomes (we are small business owners). Where is the best place for us to start as far as understanding what our options are - bankers, brokers, real estate agents, or some intermediary profession / organization that could give us advice on how to proceed? I actually own a house but we would like to start fresh. We would like to rent out my house rather than sell it. Any information, advice would be truly appreciated. Thank you.
posted by zoesmom to Grab Bag (7 answers total)

You could get prequalified for a loan prior to contacting a real estate agent who you can then give more specifics to (like your price range). You may want to find a lender who does manual underwriting. Also, owning one house then buying another house could pose some serious difficulties especially if your renter moves out and your business tanks at the same time (if both you and your partner are deriving your incomes from the same small business). You would end up with two mortgage payments to make and even less money than usual to pay them with...just something to consider.
posted by MsKim at 9:03 PM on August 29, 2010

I'd ask around for a good mortgage broker. I have a fabulous broker who has spent tons of time to help me navigate mortgages in the midst of self employment, relationship changes, and so on. He explained all sorts of stuff about structuring my income to qualify for a bigger mortgage and so on.
posted by acoutu at 9:23 PM on August 29, 2010

Can you ask around among your peers?

Our bank would only offer us a tiny pre-approval amount because she was a small business owner and I was a freelancer. A friend of a friend introduced us to a very sympathetic loans officer we wouldn't have found otherwise.
posted by bonobothegreat at 9:41 PM on August 29, 2010

@acouto - could you elaborate on what you mean by 'structuring income'. Sounds key.
posted by Muirwylde at 12:30 AM on August 30, 2010

We'd never have gotten our refinance without a mortgage broker (and tax accountant) who understands small business owners.

This could take a while -- you might need to "structure" your income on the 2010 tax return to make things look better than they did in 2009. For us, the 2007/08 years wouldn't get approval, but 2008/09 went through.
posted by omnidrew at 7:24 AM on August 30, 2010

That. Plus being sole proprietor vs incorporated and whether to include some write offs or not.
posted by acoutu at 2:36 PM on September 2, 2010

Even though you are a small business owner, as long as you can show that you have a source of income (w-2 or 1099), you should be fine.

I would just contact a LOCAL lender / loan officer directly -- maybe start with a larger bank first. Once you provide them with your current assets and debts, they can calculate your debt-to-asset ratio and tell you if you would qualify. It sounds daunting, but quite often it is just a 15 to 20 minute conversation (over the phone) with the loan officer.

** If you don't like the answer from the 'big bank' try a smaller loan company next. :-)

Also, with your current home, most lenders require that you have a signed lease agreement and deposit before they will agree to approve the financing. Hope this helps!
posted by Kerry-in-Atlanta at 9:47 AM on September 13, 2010