The process of obtaining a mortgage can be draining, especially if one is not aware of the requirements or does not get the right help. It gets even worse for those who are self-employed due to the requirements to produce income records. However, hardship does not mean impossibility. Mortgages For Self-Employed are present to help you to navigate through the process successfully.
Some of the things that lenders consider in mortgage loan application are monthly income statements and securities. If you are self-employed, presenting a satisfactory income statement may be a bit tricky especially if your inflows are not stable.
As opposed to those who are in employment, you may need to seek more specialized help for your application to go through. Below are some of the points to take note of as a self-employed person in need of a mortgage.
As a self-employed person, you will need more paperwork than those who are in employment. This is because you have to convince the lenders by all means that you are an eligible candidate for a mortgage. Y
our business is your employment and so you have to pass the test of a well-able employer. Some of the documents you will need are profit and loss statements, personal and business tax returns and list of assets. Also, you will be required to present bank statements for your business and a list of your monthly payments and all the debts.
Consider Your Credit Score
Before you even start the process of applying for a mortgage loan, try building up your credit score. As someone who is self-employed, your credit score will matter a lot when it comes to a mortgage application.
To scale it upwards, you may consider paying off a major debt just before the loan application. Such an act will make the lenders to trust you more with their money. People with a bad credit reputation are usually denied loans even where small amounts are involved. Also, a low debt to income ratio will serve as an advantage on your side.
If possible, get rid or reduce your consumer debts as much as possible. Lenders prefer loaning those without or with fewer consumer debts.
Business owners are familiar with business tax deductions and their effect on tax bills. In mortgage applications, these many deductions can actually work against you. This is because mortgage lenders will look at your income after deductions to determine whether you qualify for a loan. If the deductions are too many and make your post-tax income look meager, then you are most likely going to miss it.
Your Work History Will matter
As a business owner, you may wonder how your work history will be of help as you try to get a mortgage. The point is, money lenders, especially for mortgages, would like to see if you have had a stable and increasing income for the past two years. This explains the reason why they need to look at both your work history and current business performance.
By so doing, they are able to determine whether or not you will be able to pay back the loan. Considering the past and the present is considered useful in predicting the future. Your past years’ earnings will be used to determine the amount that you qualify for in mortgage loan.
After the many considerations by the lenders, if you do not qualify for an individual loan, you have the option of finding a co-borrower. Before you go this direction, you may want to seek advice from an expert on how to go about it. This is so that you do not find yourself struggling to repay a huge loan by yourself because you got the wrong co-borrower. You need not give up your dream of owning a home since you can still explore this option. Only do your research well and find someone who has the same interests as you.
Getting a mortgage loan as a self-employed person may be difficult but definitely not impossible. There are experts out there who can help you with the process. The above tips will also be of importance as you consider applying for a mortgage.