November 9, 2012 at 2:53 am #4155readytobuyParticipant
I was just approved, and I was looking at my approval letter, and it said that I have to maintain my total bank balances each month from what they were when I started NACA.
I have two accounts, a personal, and a business account. When I started NACA, I had about 10,000 in my personal and about 30,000 in my business account.
I went through the whole qualification process, and completed the self employment worksheet, which is averaged based on 12 months. Business income minus business expenses = income. My income came out to around 7,000 per month.
My total yearly deposits were somewhere in the 300,000 dollar range, and the expenses were a little over 200,000. Each month income and expenses are quite different, but the average is around 7,000 per year.
The reason for the self employment worksheet, in order to average the entire year.
Here is an example: One month I might have five jobs closing and I collect 40,000 dollars and then the next month only one job closes and I collect 5,000. It is constantly changing.
I can easily maintain my personal account, but my business funds are for business, and need to be spent on business expenses.
Will this effect my final approval. I am very concerned, as we have worked so very hard to get to this point, and are ready to be homeowners.
Thanks!November 9, 2012 at 11:16 am #4166TTrumbleMember
The personal acounts are going to be the key concern, insuring that they remain stable and that PSS continues to be saved each and every month until closing. You may have to show that the business account is used strictly for business purposes and that your total personal balance is increasing every month instead of money just being shuffled from one account to another to give the appearance of consistent monthly savings.
Your MC can address your specific situation, but as long as you can clearly show that the business account is indeed used exclusively for business purposes, I don’t anticipate any problems.
Online Operations, NACA
firstname.lastname@example.orgNovember 9, 2012 at 12:12 pm #4170readytobuyParticipant
Thanks for the info. I do pay some of my personal expenses out of my business account (ie. rent, utilities, car payment). They are considered owner draws. This is how I have always done things. For NACA, I had to label my business income and my business expenses within my business account to determine the personal income within the account. I have a rent payment of 1295.00 and I was approved at that amount (no payment shock). I have maintained the personal balance and even shown some increase in the amount, but as I said, the business account is always fluctuating.
On my approval letter it says: “NACA has approved the primary buyer and co-buyer listed above. Your NACA Qualification and Maximum Mortgage amounts shown below are listed on the below:
1. Monthly Mortgage Payment: 1296
You have been approved for the above payment given your rent and regular pattern of savings.
2. Payment Shock $ 0.00
You must continue to save the above payment shock every month until you close (not applicable for me)
3. Funds: 43,594 (THIS IS ONE OF MY CONCERNS)
You need to maintain at least the current amount in your bank account(s) plus continue to save the payment shock each month until closing.
4. Monthly Gross Income: 7357
If your monthly income for all qualified buyers decreases, your mortgage qualification will be lowered.
5. Monthly Liability Payments
If your monthly liability payments for all qualified buyers increase your mortgage will be lowered.”
My concern here is that this approval letter states an exact amount that needs to be in my accounts (43, 594). (10,000 from my personal account and 33,000 from my business). My business account has had a great deal of money go in and out in the last month, so for example:
33,000 starting balance
55,000 business expenses
28,000 ending balance
I still just feel confused about what to do? As I said, I pay some personal bills out of my business account, and in order to change that I would just be shifting funds from one account to another. I would be paying myself from my business account to my personal account, enough to make the bills and then paying the bills out of the personal account instead.
Can you give me some further advise? Also, I already paid bills from the business account for November.
Thanks!November 9, 2012 at 3:21 pm #4173TTrumbleMember
You’ll have to discuss it specifically with your MC, but what I suspect you are going to run into is that since you do in fact pay some personal expenses out tof the business account, it will not be able to be considered a business account, but an additional personal account.
Contrary to what you wrote, paying youself from the business and then paying your personal bills from your personal account is not shifting funds unless you actually consider what you call the busiiness account to be another personal account. Think of it this way: You need to pay yourself a salary, commission, draw, etc from the business account just as if you are a W-2 employee. This clearly clearly draws a line between what funds are personal and what funds are business. As long as any personal expenses are paid directly from the business account, the funds in that account will be considered personal funds.
Again, you need to discuss this with your MC in detail to determine how to best handle the situation.
Online Operations, NACA
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