An underwriting question.... (loan officer, real estate, credit score, loan)

[RogerDodger25]

Hello.. I'm wondering if anyone can help me out... I'm trying to get a mortgage loan. My loan officer says everything looks great on paper, and it will go to underwriting this week after the home appraisal comes in. He has sent me a pack of papers to sign and get back to him. One of these papers is a 4506-t tax transcript request form. I am a quarter owner (4 parterns) of an LLC that has incurred a loss for the last two years. (It hasn't affected my DTI personally, right?) Is there anything about having this LLC and incurring this business loss that could affect my debt to income ratio? I recently heard a story about someone in a similar situation and their loan was DENIED because of this loss. This is not my primary job. I have a full time job making great money, and my wife and I have credit scores above 760. Could this possibly jeopardize my loan approval? What does the LLC have to to with my personal DTI? I'm confused, and could use any information any of you could offer.

[chet everett]

If this is some sort of passive investment odds are against the underwriter having any where to put that kind of info.

OTOH, if you are self employed and the LLC is directly related to what you consider your full time employement / profession they may want more details.

Generally solid income and good credit score, along with no hinky mismatches between what you say you earn and what your tax liability is all they need.

If the LLC is structured so that its potential debts / liabilities are your responsibility I have seen lenders ask for additional details, but that is mostly in cases where the LLC appears to be some kind of real estate holding company and then they do title searches to make sure you are not running income property through them at owner occupied rates. THAT WOULD BE FRAUD AND THAT IS NOT AN EASILY IGNORED CRIME THESE DAYS...

[AndrewSoss]

Originally Posted by RogerDodger25

Hello.. I'm wondering if anyone can help me out... I'm trying to get a mortgage loan. My loan officer says everything looks great on paper, and it will go to underwriting this week after the home appraisal comes in. He has sent me a pack of papers to sign and get back to him. One of these papers is a 4506-t tax transcript request form. I am a quarter owner (4 parterns) of an LLC that has incurred a loss for the last two years. (It hasn't affected my DTI personally, right?) Is there anything about having this LLC and incurring this business loss that could affect my debt to income ratio? I recently heard a story about someone in a similar situation and their loan was DENIED because of this loss. This is not my primary job. I have a full time job making great money, and my wife and I have credit scores above 760. Could this possibly jeopardize my loan approval? What does the LLC have to to with my personal DTI? I'm confused, and could use any information any of you could offer.

Okay, here's the deal.

They will take the 2 yr avg losses that pass through to your 1040's and deduct them from your income. If you still have enough income to qualify, then it's end of story. If this makes your DTI too high, then they will ask for the LLC returns to see what, if any, of the expenses can be added back in to make the bottom line look better.

Long story short, probably not going to be an issue, but it's possible depending on the numbers. The theory is that if you are an owner of the LLC and there are losses, then at some point you are going to have to put prorata money into the LLC to cover the losses.

Hope this helps, best of luck.

[RogerDodger25]

Thanks Andrew! Yes, that helps alot! Thanks so much.