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I am self-employed and am trying to figure out if I could qualify to refinance my home. I have excellent credit (800+) and high enough annual income to qualify. I am not sure about how the debt-to-income ratio is determined for self-employed individuals. I've recently spoken to other self-employed individuals who have been turned down.

A little history. I bought my house in 2006 for $180,000. I had been self-employed for less than two years at that time, but I found a "creative" lender willing to work with me because I had excellent credit and cash assets. I put $60,000 down at the time and qualified for a 6.75% stated income loan. Equivalent houses in the area are currently selling for about $160,000 so I am not underwater. I currently owe $108,000 on the mortgage.

I have no debt other than the mortgage (no car loan, student loans, home equity loans, etc). However, I pay EVERYTHING by credit card in order to earn cash back. I pay them off every month by the due date, but my average balances look somewhat high. Someone told me that some lenders look at average credit card balances rather than minimum required payments when determining debt-to-income ratio. Is that true? Do I need to go cash only for a few months? Or do I need to pay down my balance every couple days to keep my revolving debt low? Will the balances in my business credit cards also be counted? Technically, they shouldn't be, since those are business expenses paid out of gross business income.

And then I also have questions about how income is calculated. Do they use my Schedule C? I have a $2000 per year depreciation write-off from the original purchase of the business. Will that $2000 be considered part of my annual income for purposes of qualifying?

If I call my bank about refinancing, do I need to ask for someone who specializes in self-employed borrowers or is this routine stuff?

Should I be requesting something more creative than a standard refi? I'd like to pay as little as possible at closing and increase my monthly cash flow.

I'm also able to pay down the mortgage somewhat if that will allow me a better deal.

Thanks so much in advance for your help!
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