CAN I GET APPROVED FOR A MORTGAGE IF I'M SELF-EMPLOYED?
The short answer- yes- but it's not always a walk in the park. Let's look at some self-employed mortgage tips for your home ownership journey.
When securing a mortgage, we self-employed go-getters face a unique set of challenges. Being your boss has its perks, but when it comes to mortgages, it can raise a few eyebrows.
Unlike the 9-to-5 crew with their clean pay stubs, we freelancers and business owners deal with income rollercoasters. So, it's all about proving that we've got our financial act together.
To ace that mortgage application, a focus on long-term planning, effective tax management, and maintaining a strong credit profile is necessary moving forward. Here are my self-employed mortgage tips:
Play The Long Game: Lenders love stability, so show them you mean business by having a solid income track record. It may mean biding your time and building that financial cred for 1-2 years before jumping into the mortgage game.
Tax Game Mastery: Self-employed folx need to whip out some tax returns that paint a pretty picture - which means maximizing income on paper without going overboard on deductions. It is counter-intuitive as we are usually trying to take as many deductions as possible. Still, lenders consider the net (income-expenses & deductions= net) as your income for self-employed people.
Stay Uber Organized: Lenders dig paperwork, so let's make it rain documents. Document all income, and expenses, and save all receipts. Consider using accounting software to make your life easier.
Show Them The Money: Lenders may want to see a "seasoned reserve", which means a stash of cash set aside for a rainy day. This demonstrates you have the financial security to weather a few storms
Flex Your Credit Muscles: A killer credit history is your golden ticket. For more tips on maintaining or improving your credit score, check this out.
Chat With a Lender & REALTOR now: Even if you're not ready yet, speaking with an expert is the best way to be prepared. The tips above will get you halfway there, but to get the full picture it's crucial to get their opinion on your unique situation.
Successfully navigating the mortgage approval process as a self-employed individual requires a deep understanding of income fluctuations and strategic planning for stability.
By showcasing consistent income streams, implementing proactive financial measures, and maintaining meticulous documentation, you can steer your financial ship toward a successful mortgage application.
I'd love to chat if you're ready to take that next step. Book a Zoom call or in-person consult to find out how we can work together. I've got a list of trusted local lenders & other resources ready to help you make the right choices for you.
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