Being self-employed has its perks – you’re your own boss, you set your own hours, and you can take control of your career. However, when it comes to buying a home, the process can be a bit more complicated. Traditional mortgage lenders often require a steady income and a W-2 form to prove it. This can leave self-employed professionals feeling excluded and frustrated. However, there are options available for the self-employed to finance their dream homes.
Understand Your Options
As a self-employed professional, you have two main options when it comes to mortgages – traditional and non-traditional loans. Traditional loans are the most common type of mortgage and are offered by banks, credit unions, and mortgage lenders. Non-traditional loans, on the other hand, are designed for self-employed borrowers who may not have the documentation often required by traditional lenders, such as W-2 forms or pay stubs.
Gather Your Documentation
To apply for a self-employed mortgage, you will need to provide documentation that proves your income and your ability to repay the loan. This can include tax returns, profit and loss statements, and bank statements. Make sure to keep accurate records of your income and expenses to make the application process smoother.
Work With a Mortgage Professional
Navigating the mortgage process as a self-employed borrower can be confusing and overwhelming. Working with a mortgage professional who specializes in self-employed mortgages can make the process much easier. They can help guide you through the application process, answer any questions you may have, and help you find the best mortgage option for your unique situation.
Consider a Larger Down Payment
Since self-employed borrowers may appear riskier to lenders, they may require a larger down payment than what is typically required for traditional borrowers. While it may seem daunting, making a larger down payment can make you a more attractive borrower and give you more financing options.
Keep Up With Your Credit Score
Just like with traditional mortgages, your credit score plays a large role in the approval process for a self-employed mortgage. Make sure to pay bills on time, keep credit card balances low, and monitor your credit score regularly. A good credit score can. Being self-employed doesn’t have to be a barrier when it comes to financing your dream home.
With the right preparation and guidance, self-employed professionals can take advantage of the many financing options available to them. By understanding your options, gathering your documentation, working with a mortgage professional, considering a larger down payment, and keeping up with your credit score, you’ll be on your way to purchasing the home of your dreams. Don’t let your self-employment status hold you back – you can make homeownership a reality!
For more information about self-employed mortgages, reach out to a local service.