Debt On Business Credit Card Vs. Personal Credit Cards
I need help! I want to buy a home and i have 2 types of credit card debt business credit card -$4,000 & personal credit card debts w/ 5 credit cards totaling $5500. I will be able to pay off one side of my debt (personal credit) and still have enough for a down payment on a home. But i won't be able to pay my business credit card debt off when i apply for a home loan. will i have problems getting a loan or do the lenders only look at your personal credit history. Also i checked my fico score and it only displayed my personal credit card debts. please let me know if you have some info thanks jj
Not enough information here to really answer.
What is your credit score??? go online and pay to get it if you have to. SItes that do this are ubiquitous..
[addsig]
I pulled all three of my credit reports and they only showed my personal credit card debts as well. I believe business cards are reported to dunn and bradstreet.
When obtaining a loan, credit depth and history is used. Your business credit will not be counted in the debt ratio with the following proof:
1) All credit cards, loans, vechicles, mtgs, ect for the business must be paid out of a business account.
2) Your credit score will determine how this is done.
3) If any of the above items are maxed out, you would be required to show 12 months cancelled checks or 12 months bank statements if auto deducted
This is just a basic answer, all situations are different. Some need more proof and some less.
How you handle your personal finances will also be a big indicator on the proof you will need.
I would not suggest getting a credit report on line, call a financial institution and get one from them. Even if you have to pay. The credit reports on line do not and will not help in obtaining a mortgage. You will need mortgage credit report. The calculations for mortgage, car, and credit cards are different.
Lori
[addsig]
Thanks for the help, if i'm not mistaken you guys suggest i should be ok if my personal credit is good fico score of over (720). Even if i have a high -$4000 business credit card debt. I don't make any automobile payments and my insurance is relativaly cheap @ $110 a month not bad for las vegas one of the expensivest car insurance cities. I am worried about lenders seeing my business debt since i will be telling them i am self employed and i don't want them to look at my business debt. Should i do this?
How do you pay yourself? Do you draw a paycheck and give yourself W'2's? IF so I would see if you can just submit those instead of going through the self emplyed rigamarole. Now having said that I don't know if there is a question on the app that asks if you are self employed and I am not encouraging loan fraud or anything just a thought outside the box
Olympia,
If the mort. company knows you are self employed, you will have to provide at least 2 years of tax returns, checking account statements, profit & loss & balance sheet statements. Your business debt probably will not be on your credit report, but it will show up on paper with all the other statements. There are banks that will do what are called "Low Doc Loans" (which means they won't crawl up you with a microscope) but you will have to have more $$ down and will probably get hit with higher interest and/or points.
Hmmmm, thanks this has confirmed my suspicion on what the lender wants as for income verification, for being self employed. However i was also thinking of another route although it's sort of a catch 22 of what i should do. Heres my other route, because las vegas is a very unique city as far as income. I also make a healthy living off proffessional sports betting. The catch 22 is if i say i am a proffessional sports bettor i know the lender will see me as a risk because of the proffession, however i can verify my income better doing this as opposed to my business (my business is legit with an actual business licenses etc.) however on my business i really didn't report anything to the IRS and don't have any w2s. However i can prove i made money through sales reciepts from my business to the lender ?What should i do? Have the lender see me as a proffessional sports bettor (las vegas) being able to verify income. Or self employed with sales reciepts. OR a combination of both? thanks jj
With your scores you will qualify for a NO DOC or NINA (No Income No Asset). You may face a little higher rate but the underwriting is quick and easy. I have recently done alot of these with self employed people.
Thanks GregTanner for that that's what i need to know. I wanted to know what you mean about the underwriting being much easier and faster. Also a NO DOC is what i am really looking for i'm not sure about a NINA because i have a few assets like owning my car w/ no payments also some stocks and mutuals. BUT my concern on a NO DOC is will i have to pay alot more on the down payment and closing etc? will i run into other problems to get the lender loan? thanks jj
It is hard to get 100% LTV with a No Doc loan but it is possible. In my experience, you normally will receive 90 to 95% LTV. The underwriting is easy because all they are looking at is a credit score and an appraisal.
Ok, i see what you mean with the loan to value ratio. My friend recently just bought a home here in vegas while in pre-construction bought it for 176,000 got it appraised a few days ago now worth 285,000 because of the hot market here will i get a good loan to value ratio from the underwriter who figures the appreciation will definantly go up on the loan. Thus will this enable me to put a less down payment say 5% or less?