Sorry, I'm new to this system. I was thinking that incorporating and funding the corporation and paying myself through the corporation would provide seperation between business income and payrol specifically for myself. My hope is to satisfy the lenders need for paystups and W2's. Would this not work with a California or Nevada based corporation or LLC?
Country/State/Province of question: usa, california
That would depend upon the lender, but unless they have their head in the sand, it will be obvious what you are doing. Putting your compensation on a payroll that you control, really doesn't accomplish anything except run up a lot of overhead with no benefit. In other words, a giant waste of time & money.
Why do you think that the lender won't accept copies of your income tax returns as evidence of your income?
Also, they are going to be interested in a track record over a period of time, not just a current pay stub. You might blow that buy someone to buy a car, but not when you are dealing with a real estate mortgage.
After all, you are talking about a refinancing, so your payment record will speak for itself; it isn't as if you are applying for a new loan.
I've been basically self employed with small amounts of income from rents and independant sales jobs. I've been supporting a business venture with cash
The revenue doesn't support a re-fi and I'm trying to save my place until other arrangements are made or revenue is generated. I'm hoping to find away to create distence between the lack of revenue for the business and my income by simply starting to recieve a salary
My house went under forclosure proceeding prior to recievng an influx of cash
thats the background
How are you going to afford to pay a salary & all the additional payroll taxes and administrative costs of operating as a corporation. Doesn't seem to make sense to me.
Your net will be higher without those additional costs.
Either way the revenue has to support the expenses salary or otherwise.
Right now the business has 0 net, I am thinking to seed the business with cash, whoile creating a cash flow. It will opperate at a loss. In the meantime, pay myself with a salary in hopes of using that income to qualify and save the house. I wasn't planning to incorporate this early so I know it's a financial burden but amn trying to save my living situation at the same time. I have enough cash in the bankl now that I could make my mortgage payments for some time to come.
Unfortunately, The bank doesn't want top work with me under those simple circumstances
They want proof of income, or a profitable balance sheet
As I said, creating a salary from a company you control won't do the trick; in fact it will make your situation a whole lot worse; perhaps you should think about putting your company on the "back burner" for awhile and getting a job that will pay you a reasonable salary until you can stabilize your living situation; If your home is "under water", you need a loan modification not a refinancing; if the bank won't do that, no matter what you do you are going to be sending good money after bad;
Yes, I know, I'm really grasping at straw at this point. Yes, Getting a job would be great. Thank you for your input
Sorry I can't come up with something better.............
Is the house still in foreclosure?
Yes it is and I'm trying to come up with a solution, the modification process is rediculous, the banks seems to have no incentive to work things out and although my house is about 40% underwater I'd like to stay and get back to just paying them but the loan is a variable rate and I'm also afraid that in the coming years I'll be in this sitiuation again unless I get the loan to a fixed rate
Well, at least in California they can't come after you personally for the deficiency.
40% underwater is a tough road to hoe; how long have you been in the house?
What part of CA are you in?
Ya, that is what I hear, but unfortunately the bank just wins, they probably bought my loan at .30 on the dollar so even a foerclosure sale doubles their money
Are you married, children?
it's been about 6 years since I got my loan, very bad timing. Central CA, single with a grown up child living away.
The bank was happy to give it with no docs filing, now that has changed
Although I did suply the docs ayt first, they then came back and said the no doc was the only way I would qualify, I guess I should have understood what that meant
of course the no doc was a higher APR
Maybe it's time to stop beating your head against the wall, bail out & use your cash to rent a condo or something & wait it out; you might even be able to get a "straw" (attorney) to get your house back at the foreclosure sale; it would give you time to line up some private (non bank) financing;
too many no docs is what made the bubble burst
Yes, its been a lot of head beating for sure... Thank you again for your insight, the money seems to keep saying suck it up and walk
Sad but true
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Great, Thanks, You've been very helpful.
Extensive Experience with Tax, Financial & Estate Issues