Posted by lachin hatemi on September 04, 2003 at 19:00:05:
His income on tax returns is $12000 but his actual income is $50,000(what he really makes) coming to his checking account per year from foreign banks.
Am I being cheated? - Posted by lachin hatemi
Posted by lachin hatemi on September 04, 2003 at 18:25:03:
Dear Friends
I applied for a first-home mortgage for my father. He is self employed and his income is $12000 for last 2 years on his tax returns. We proved his actual income is $50000/year from his checking account.
His credit score is 670 FICO. My bank told me there is no way I can get a fixed rate mortgage at 6.5%, he is trying to sell me a “IN-HOUSE” mortgage for 6.125 first 5 years and market rate after that (which can go up to 11.5% if interests go that high). I believe interest rates will go up that high in near future and I do not want to be trapped with this mortgage.
By the way we pay 20% down on a $180,000 house with also enough cash reserves left for a year’s payment in our checking account. This deal might stink if interest rates go sky high after 5 years.
Re: Am I being cheated? - Posted by IRS
Posted by IRS on September 06, 2003 at 12:36:06:
What did you say his full name was again??
No, someone else got cheated. - Posted by Frank Chin
Posted by Frank Chin on September 05, 2003 at 07:06:33:
Lachin:
I know many folks owning cash businesses, and my dad owned one before he retired.
When I was employed, I paid every last nickle due in taxes to Uncle Sam. But on the other hand, with good credit, I was able to get the best mortage rates.
But self employed folks who under report income skip out on paying a whole lot of taxes and FICA. The self employment tax alone on $38,000, the amount under reported, is $5,000/year, not to mention Federal and State taxes not paid.
In your dad’s situation, he can go for NO DOC, NINA loans where the amount of income is not the big consideration. But he might not get the best rates.
Think of it this way. If he paid 1% more on a 150K NO DOC or NINA mortgage compared to a conventional mortgage, he’s only paying $1,500/year more, and its deductable. But he’s already $5,000 ahead just on underpaying the self employment tax.
So I thing Uncle Sam is the one cheated, not your Dad.
Rememeber, when you make compromises in life, you can’t be ahead in every category.
Frank Chin
Re: Am I being cheated? - Posted by andy
Posted by andy on September 04, 2003 at 21:34:16:
I would not think he would have much trouble getting a stated income loan. Your father has good enough credit and LTV. These rates are not be much higher than tradition loans. 6.5 should be possible
Re: Am I being cheated? - Posted by James Strange
Posted by James Strange on September 04, 2003 at 19:45:14:
You need to work with a lender who will use an alternative doc program. This will require you to show bank statements. No bid deal.
How ever these programs do not have the best rates.
James Strange
Re: Am I being cheated? - Posted by Bandman
Posted by Bandman on September 04, 2003 at 19:25:54:
There’s more than one place in the world to borrow money, someone else might give you what you’re looking for. Of course, if you’re willing to commit tax fraud against the US government, they might wonder whether you’re playing straight with them.
Not cheated - Posted by Franklin
Posted by Franklin on September 04, 2003 at 18:59:15:
No, you aren’t being cheated. It does however sound like you might have been cheating the IRS and if you hadn’t done that you wouldn’t have a problem here (not that I care personally about cheating the IRS).
If you don’t like their deal, shop around. there are TONS of mortgage companies.
Incidentally, this is exactly the kind of reason that businesses don’t hide all their cash reciepts from uncle sam.
Re: Am I being cheated? - Posted by phil fernandez
Posted by phil fernandez on September 04, 2003 at 18:42:54:
If his income is $12,000, how can you prove that his income is $50,000. I’m confused. His income it would seem would have to be one or the other.
It’s Lachin Hatemi, Sr. NT - Posted by Frank Chin
Posted by Frank Chin on September 06, 2003 at 17:48:39:
.