Self Employment and Mortgage Application
Being self employed offers a lot of freedom. You set your own hours, decide your own holidays, and even have final say whether the hairstyle you have is “professional”. However, it is interesting to see that being self employed also means a great deal of responsibility falls on you. Especially when talking about a mortgage. Usually business costs are seen as limiting to your income to debt ratio as well as seen as high risk to any potential lenders. Not only that but because you do not receive a steady paycheck from an established company your income may be suspect as well to any lender.
Don’t let that discourage you though! There may be more hoops to jump through but rest assured it is still very possible to get a mortgage if you are self employed.
Self Employment Mortgage Tips
One facet of your application that will be scrutinized by the underwriters of your loan will be the amount of money you make. In order to ascertain whether or not your income is steady most lenders will require statements and tax returns from a minimum of two years. This will show whether or not your self employed business has been secure and will continue to be for you to pay back the money you owe.
Your credit score is always important when you are applying for a loan and possibly even more so when applying as a self employed individual. A high credit score shows how well you handle money whether it be your money or when borrowing from another.
One often overlooked avenue of convincing lenders that you are responsible are references. Being able to provide a lender with people, accountants and financial advisors, who can vouch for your financial stability will greatly improve your chances.
Finally a great way to help your chances is to increase the size of your down payment, this will bring the size of your monthly payment down and allow greater financial freedom.