Announcement

Collapse
No announcement yet.

Loan Refinance for self employed physicians

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Loan Refinance for self employed physicians

    Many of these online lenders like Sofi/Earnest require a 2 year history of income from self employment before allowing for refinance. Many physicians, like myself, just recently started our own private practice and so I do not have that history. Even though my income is very stable, these companies are categorizing physicians in the same group as others who have less reliable income due to self employment. What options do I have?

  • #2
    1. Tax returns and tax transcripts. In lieu of a W-2s or pay stubs, some lenders may request several years' worth of tax returns or tax return transcripts to verify your income. ...
    2. Bank statements. ...
    3. Collateral. ...
    4. A co-signer.
    The issue is “income verification”. You might get a personal unsecured loan from a local bank or credit union. This will change the student loan to a personal loan and you will not be able to refinance that as a student loan in the future.

    Comment


    • #3
      These are actually Fannie Mae and Freddie Mac requirements. Almost all online/B&M mortgage brokers and financial institutions only originate the mortgage. Almost all mortgages are resold and must confirm to Fannie Mae and Freddie Mac underwriting requirements.

      ​​​​​​Your options are to find a local bank or credit union that will underwrite the mortgage themselves or find a mortgage broker that represents individuals or investment groups. Both of these are likely to have higher interest rates.

      One other option is to wait. White Coat or not, your business has no track record. You still present a risk. Startup practices do fail or provide insufficient income for that Doctor's house.

      Comment


      • #4
        well what’s annoying is they had no idea or consideration that (in my case) my specialty and local job market is such that i could easily get a w2 that pays to their satisfaction. I’m not someone with a high school degree who just opened up a candy store, whose w2 alternative is retail cashier. so i feel for OP having gone through this headache.

        is it worth exploring a part time w2 side hustle, ideally one that has a contract? idea being to meet the bank’s myopic requirements and then quit the w2 when you get the loan . . .
        “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

        Comment


        • #5
          You missed the point that these are Fannie Mae and Freddie Mac underwriting guidelines. The originator has no say and must follow the guidelines exactly.

          The part-time W2 job wouldn't help. This is for income verification. Only the amount of that income income would be added to the average self-employed income over the previous two years.

          In my case, I had one year of self-employment income at 150% of what I needed to qualify for the loan. They said great, we'll divide that by two and you only have 75% of the income necessary to qualify for the loan. The fact that the year prior to self-employment was more than enough to qualify did not matter.

          Your condescending analogy to relative income levels also does not matter. Many, many high income individuals default on their mortgage. Whereas, people like my single mother sister who never made close to the median wage, never missed a mortgage payment.

          Comment


          • #6
            Mortgages are one type of secured loan. Student loans are another and personal loans another. You are asking for a private placement loan or loan approval. Local bank of credit union will have a loan committee that will consider the loan and you need a loan officer advocating for you. The lenders are not in business to help the borrower, That is the fallacy of your complaint. As a matter of fact, you could have $10m in retirement accounts and the answer would be the same. The lender would not be protected. I gave you the four criteria used. Bank statement are actually of limited use. The lender views those as verification of wealth, but not useful if it disappears. Their response would be "pay cash" rather than borrowing from us.

            "is it worth exploring a part time w2 side hustle," The only thing that will count is the guaranteed amount. Incentive or production will require two years of documentation.

            Comment


            • #7
              Originally posted by spiritrider View Post
              You missed the point that these are Fannie Mae and Freddie Mac underwriting guidelines. The originator has no say and must follow the guidelines exactly.

              The part-time W2 job wouldn't help. This is for income verification. Only the amount of that income income would be added to the average self-employed income over the previous two years.

              In my case, I had one year of self-employment income at 150% of what I needed to qualify for the loan. They said great, we'll divide that by two and you only have 75% of the income necessary to qualify for the loan. The fact that the year prior to self-employment was more than enough to qualify did not matter.

              Your condescending analogy to relative income levels also does not matter. Many, many high income individuals default on their mortgage. Whereas, people like my single mother sister who never made close to the median wage, never missed a mortgage payment.
              Don’t know these guidelines, but first post residency job was w2 *with contract* and had no problem refinancing a couple months into starting it. My limited experience suggests there is a game to be played with the guidelines, same way they care so much about minimum monthly payments on other debt that you dont want to refinance into shorter term with higher monthly payments at lower rate before refinancing these loans. or lump sum borrowed from family magically becomes your asset when held in a bank account for three months. gamesmanship.

              Example was meant to be extreme. My family background is entirely working class and I have had plenty of jobs much worse than cashier (smell of dishwashing chemicals and grease forever burned into olfactory memory) so no offense to your family or mine.
              “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

              Comment


              • #8
                The underwriting guidelines are quite voluminous and very strict. W-2 with contract is still W-2 income and treated the same as any other W-2 employment. It is not the same as self-employment which has very stringent requirements.

                It doesn't have to make sense. It is likely there is a much higher risk profile for self-employed individuals. They probably default at higher rates than W-2 employees.

                Comment


                • #9
                  I love how everyone is telling you no one owes you a loan, and I agree.

                  Comment


                  • #10
                    Originally posted by spiritrider View Post
                    You missed the point that these are Fannie Mae and Freddie Mac underwriting guidelines. The originator has no say and must follow the guidelines exactly.

                    The part-time W2 job wouldn't help. This is for income verification. Only the amount of that income income would be added to the average self-employed income over the previous two years.

                    In my case, I had one year of self-employment income at 150% of what I needed to qualify for the loan. They said great, we'll divide that by two and you only have 75% of the income necessary to qualify for the loan. The fact that the year prior to self-employment was more than enough to qualify did not matter.

                    Your condescending analogy to relative income levels also does not matter. Many, many high income individuals default on their mortgage. Whereas, people like my single mother sister who never made close to the median wage, never missed a mortgage payment.
                    I'm confused why you keep commenting about mortgages on a student loan thread - can you help me understand what your comments' connection is to this?

                    I find it weird that a resident can refinance their loan with no income history, but OP would have trouble in their situation? Since this is a market that WCI really did 'create' (maybe not create, but certainly deserves credit for making it an actual market and getting more banks involved) - maybe he can comment.

                    Otherwise, my suggestion to OP on 'options' - have you spoken to someone at these refinancers, or are you just looking at the online application? I have to imagine there's a market but maybe you just need to push a little harder to get to the solution?

                    Comment


                    • #11
                      Obviously, I'm the one who is confused. Although, at least SoFi does originate mortgages too.

                      When I saw the two years of self-employment requirement, I flashbacked to my own frustrating self-employed mortgage experience when buying my current house. The actual house I bought is directly related to that requirement. The only mortgage I could get was a Bank's portfolio loan for a house they foreclosed on. Fortunately (for me) they had dozens to choose from.

                      Comment


                      • #12
                        Gotcha- I assumed Fannie/Freddie could play a role in backing student loans somehow, so thought that it could have something to do with that.

                        Comment


                        • #13
                          Try all lending companies. Some may be willing to work it’s a newly graduating 1099

                          Comment

                          Working...
                          X