Wednesday, May 7, 2014, AM | Leave Comment
Many perspective home owners who are currently looking to obtain a mortgage loan sometimes find that the process can be a rather large headache. For those who are self-employed, getting a mortgage can be even more of an issue.
Today’s mortgage standards are stricter than in the past, and the need more documentation showing that you have a steady stream of income has increased.
Because of this, it is often a challenge for those who are self-employed to obtain a mortgage or even refinance their current loan.
Mortgage lenders on average like to look at a two-year span of a perspective buyer’s income to make a determination on whether or not the borrower can actually afford the mortgage.
This may be an issue for those who are self-employed due to the fact that their income fluctuates from year to year. Because of this, it is particularly important that the borrower has as much paper work showing employment as possible.
Being able to show as much documented income as possible gives the potential borrower a better chance to get approved for the loan they need.
Along with having the necessary documents, saving as much money as possible to put towards the down payment also helps out a great deal.
If you can provide this, borrowers will be more likely to give out the loan due to the fact that you will have equity in the house upfront.
Among the suggestions listed above, lenders would be more open to give you a loan if you are able to provide a successful track record of self-employment. This will demonstrate to lenders that you are able to sustain your work, and would be capable of paying your mortgage.
Another great idea for self-employed individuals is to have as much cash as possible in the bank. To shows lenders that if your business were to go through a rough patch, you would still be able to make your loan payments.
One of the biggest factors in being able to purchase a home as a self-employed worker is to make sure that your credit score is up to par.
Although this seems standard for all mortgage loans, it is even more important for self-employed individuals because their name is also tied to their business.
Credit is a very important aspect of owning a business, and if you have bad credit both you and your business might be in a bad spot. Lenders have no issues give potential home owners loans as long as their credit is in good standing.
Although the loan process is usually quite stressful, and even more so for those who are self-employed, there are many ways to assure that you can get the necessary loan for the home of your dreams.
With the proper preparation and providing all the necessary paper work, self-employed individuals are more than capable to purchase a home.
Mark Scheets is a writer for Total Mortgage Services. Since 1997, Total Mortgage has combined the personal service and integrity of a local lender with low rates, convenience, speed, and know-how of a national lender.