One of the Keystones to qualifying a home buyer for a Mortgage is proving Income. I received a call from one of my realtor referral partners this week and they asked me about a 1099 borrower. The borrower had a Pre-Qualification letter in hand that stated he was qualified for a purchase up to $175,000. She had the fore thought to ask him if he was paid on a 1099. He said yes. He had only been out of the Military for 2 months, so he only had 2 months income on a 1099. A 1099 income borrower is considered Self Employed, and being so, must have 2 years history of self employment. Bottom line, he had no usable income in the eyes of the mortgage world.
With that in mind, I wanted to provide you with a couple of questions to ask your clients to make sure that they have been properly Pre-Qualified to purchase a home.
- Are you self employed?
- Are you paid 1099 or W-2 and Paystub?
- Do you currently own any rental property?
- If the answer to either of those questions is Yes, Ask if they provided any of the following information to their lender:
- 2 Years Tax Returns(have you been in business 2 years?)
- K-1’s from a business return
- Proof from the Secretary of State that you have a corporation
- A business License for the last 2 years
If they have not at least provided the last 2 years tax returns to the Loan officer for review, then there is a chance that they may now qualify for a mortgage.
Hope this Helps!
Managing Partner, Options Mortgage Services