Denied refinancing due to new self employment requirements

6 Replies

If anyone else has experienced this while trying to refinance, please let me know. With perfect credit, 6 figure cash reserves, and a 6 figure self employed income that wasn't affected by Covid, we were just denied refinancing on our investment properties. They said there were new laws in place for small business owners that make it next to impossible for them to get any kind of financing. They also could NOT count our years of AirBNB income as income because they said "There will be another second wave" so they cannot count it as reliable income anymore?? I'm literally shocked at these new requirements. Our self employment income was cut to 1/3 due to the new calculations they use, making the debt/income ratio completely off. He said only 1 out of 100 self employed clients are getting financing right now.

It was Quicken loans. He said they were just added during our loan process. We were approved from the start,but the process went on for over 3 months due to all the extra things they kept asking for. It very concerning for sure. I'll be calling local banks but I was wondering if this was an "across the board" thing. 

Originally posted by @Brittney WIlliams :

It was Quicken loans. He said they were just added during our loan process. We were approved from the start,but the process went on for over 3 months due to all the extra things they kept asking for. It very concerning for sure. I'll be calling local banks but I was wondering if this was an "across the board" thing. 

 Yuck, Quicken Loans is expensive and horrible to deal with. I know people use them because it is online and easy, but I would avoid at all costs. Avoid Rocket and all the online ones. Call local banks. I just refinanced with a local bank and they are holding the loan in house. I took a little time, but just due to COVID slowing things and overwhelming demand for refinances. Call a bunch of banks, but do not let them all pull credit until you are confident they will work with your situation. If they all start doing hard credit pulls, it will affect your credit score.

Brittney,

Without getting into details firs toff your dealing with QL and when your talking to a call center in most cases or a new LO. You find out you they promise more than they can deliver. That being said there is no new law(s) that are restricting business owners who can verify income a loan. I have seen cases where the LO cannot make heads or tails of a business P&L or it's schedules. You need to have a seasoned bank/lender look at your returns and you current P&L and that will get you approved if the income qualifies. Even if the income is short and the DTI is off you just use another program that looks at your business bank statements or an asset optimizing loan that use the cash flow of the investment if that is the subject property!

@Brittney WIlliams

Yikes! I never liked those “big box” lender types. They treat lending like a production process. Direct message me if you want the info for my lender. I believe she can originate loans in all States but NY

Good luck