applying for a mortgage as a pro trader

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drp7804

Wanted to know if any professional traders here have tried applying for a mortgage...? How did that go; were you approved? How much scrutiny was given to your profession, income, etc? I'm mainly referring to traders who don't earn a salary/wage from some other line of work.

I'm currently a software engineer, but also trade the regular-hours US equities sessions (automated). I see a fork in the road at some point ahead where I'm hoping to focus my time solely on trading, but also want to move my family to a new house, among other things. My line of thinking thus far has been to hold the day job long enough to secure the mortgage... but curious nonetheless how easy it might be to get the mortgage if trading were the only profession listed on the application. I'd assume the longer the history of consistent profitability the better.

Any insight, anecdotes, etc would be awesome. Thanks in advance.
 
Quote from drp7804:

Wanted to know if any professional traders here have tried applying for a mortgage...? How did that go; were you approved? How much scrutiny was given to your profession, income, etc? I'm mainly referring to traders who don't earn a salary/wage from some other line of work.

I'm currently a software engineer, but also trade the regular-hours US equities sessions (automated). I see a fork in the road at some point ahead where I'm hoping to focus my time solely on trading, but also want to move my family to a new house, among other things. My line of thinking thus far has been to hold the day job long enough to secure the mortgage... but curious nonetheless how easy it might be to get the mortgage if trading were the only profession listed on the application. I'd assume the longer the history of consistent profitability the better.

Any insight, anecdotes, etc would be awesome. Thanks in advance.
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... Just pay it all in CASH.
 
describe professional trader...
i've tried to apply with my wife..my income from trading like six figures..wife making some money on regular job 50-60K..i file as unemployed..they don't understand a thing from my taxes..20K interest..what is this interest? mortgage agent was asking..
shiiiit..we ended up with mortgage on my wife only(and i paid it in full within year or so)..no one in this messed up mortgage industry would understand your trading profits..no wonder they failed..

just apply as regular soft engineer with paycheck..leave your profits(if any) alone
 
Quote from Bob111:

..i file as unemployed..they don't understand a thing from my taxes..20K interest..what is this interest? mortgage agent was asking..

no one in this messed up mortgage industry would understand your trading profits..no wonder they failed..

just apply as regular soft engineer with paycheck..leave your profits(if any) alone
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If you fill out an application as "unemployed" and can't prove your trading income for the past two years, please don't blame the mortgage industry for not rolling out the red carpet and giving you a blank check.

Your logic is backwards. The reason the lenders failed is that they made loans for people who were "unemployed".

Congrats for paying off your loan - you are the exception to the rule.
 
My guess is that most traders are probably better off just paying cash for anything. Most people do not understand trading as a profession.
 
Most of these responses are not really credible from my personal experience if you are truly a full-time trader who shows consistent positive cash flow via IRS returns, bank statements, and monthly brokerage statements.

And put about 10-20% down.
 
Not as a trader, but as a person with consulting/contracting/1099 employment, the issue with the bank is to document your income as a business. The bank is concerned with meeting qualification guidelines so that the mortgage is resellable. They are not overly concerned with IRS regs.
Give your trading a name "Steve's Trading", and a pro-forma income statement showing your "income" each month since you retroactively decided to start this trading "business." If it were really a business, one would need to pay self-employment tax, unemployment compensation, business licensing, .... That isn't the bank's concern. They want to say there is a self-employment income which, on average, pulls $XX/month. Set your start-date to give yourself the most credible and consistent trading income.
I haven't found large money down to get me anywhere with banks. Being able to show that you have a few months back-up in the bank is important. Remember, they are giving loans to commission-only salesman and construction site labor who have no clue what they will be making.

The issue is to frame the information so that it fits their guidelines.
 
All the banks I've dealt with only cared about 2 or 3 years of tax returns showing I made enough. They didn't care how I made the money, just as long as I backed it up with proof.
 
Quote from lescor:

All the banks I've dealt with only cared about 2 or 3 years of tax returns showing I made enough. They didn't care how I made the money, just as long as I backed it up with proof.
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That may have been true pre 2008. In fact it was, as I easilly got my mortgage then. Today however, no bank will give you a mortgage without earned income at the lowest mortgage rates, To the OP, I highly reccomend getting the mortgage before quitting to trade full time.
 
Thanks for all the responses. I found an Investopedia link about applying when self-employed... says a lot of what's already been said here:

http://www.investopedia.com/article...lf-employed-mortgage.asp#12960794387312&close

Generally sounds like it's a tougher road if trading is the sole source of your income, but not impossible either.

One advantage of switching to full-time trading first would be no need to worry about finding a home within commutable distance from the day job (again, assuming remote trading). This opens up all kinds of possibilities for where to live. Though there'd be infrastructure concerns (thinking internet bandwidth) which could limit your options a bit... but you'd have that limitation regardless of employment status.

Plan C is to sell a few shares of my stake in BRK-A and be done with it. :D
 
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