Why is it so Hard For Small Business Owners to Refinance?




There are many great San Gabriel Valley area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (626) 643-7090 for a FREE home buying or selling consultation to answer any of your real estate questions.

Today I am talking about a hot topic in the finance world. Our former federal reserve chairman, Ben Bernanke, has recently had a bit of a tough time refinancing his home in Washington D.C. Although Mr. Bernanke makes over $200,000 per speech, the fact that he is a small business owner has resulted in him being denied refinancing on his home. 

Nowadays, the federal reserve is more geared toward salaried workers and those with W-2's instead of the small business owners and their 1099 tax returns. 

So if you are a small business owner and filing a 1099 return, we think that it would be a good idea if you instead filed as an employee with a W-2. You can pay yourself the same amount, but if you give yourself a paycheck with a W-2, it will make things a lot easier when you try to qualify for a loan. 

Rates right now are really good. Five-year fixed loans are right around 4.75% and seven-year fixed loans are right around 5.25%.

So, if you are planning on purchasing a new home or refinancing, get your W-2 pay stubs as opposed to your 1099, and make sure to keep your FICO score above 700. 

Until then, keep safe and be happy.