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PDtax
PDtax, CPA, MBA
Category: Finance
Satisfied Customers: 3970
Experience:  Tax professional and business consultant for 35 years.
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I recently bought my primary residence with 20% down. Because

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I recently bought my primary residence with 20% down. Because there is a need for home improvements I want to get a HELOC. I am a W2 employee and wife is self employed owner of 3 LLC's. She made loss in 2011, but turned profit in 2012 and 2013 is looking good as well.
When I went to US bank they could n't considered her draw as income, only looked at our tax returns as a source of her income. This resulted in high DTI and we were turned down. Can anyone offer insight into what and how the banks would look for my wife's income

PDtax :

Welcome to the site. I'm PDtax, and can assist.

PDtax :

It sounds like your lender is looking only at W-2 verifiable income for loan requests. A return to more traditional lending after the loan issues of a few years ago is my guess.

Customer:

So what resort do we have to include my wife's income from self employment

PDtax :

The easiest way to get this bank to look at her income in your loan application is to establish a wage from one or more of her LLC's. The wage moves income to her for loan purposes, and the entity throws the remainder income to her without the self-employment taint.

Customer:

She already is taking wages and has 1 year of W2

Customer:

but they want 2 years of W2's

PDtax :

Then one more year should give the bank two years wage history, which more traditional lenders will do.

Customer:

So wait for the second W2 and submit again

PDtax :

You could produce a year to date wage statement showing higher wage, to be confirmed in January 2014 with a copy of the W-2.

PDtax :

Support that interim wage with copies of the 941's.

PDtax :

That way they should have enough without having to wait until january.

PDtax :

I often write letters for borrowers explaining these issues, but some banks have gone back to older banking ways.

Customer:

ok thanks

PDtax :

I hope that gives you an option to consider. Thanks from Just Answer. Positive feedback closes out your question. I'm PDtax.

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