We have issues time and again with “declining incomes”. Lenders are very concerned about this issue b/c of our recessionary environment. If a self-employed borrower has income that declined from 2008 to 2009, not only will the lender only correlate to the 2009 income (in lieu of averaging 2 years), the lender will also require a convincing letter that explains why the income will not continue to decline.
This is more serious than many of our borrowers realize, and it is unfortunate b/c many of these self-employed borrowers are doing great but they merely deferred some income for tax purposes.
Likewise, if a salaried borrower has declining income or overtime, lenders often refuse to let us use ANY overtime income no matter how much overtime was earned in years past. We have had several loans either squelched or curtailed in recent weeks because of this issue. So beware.
Call Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646