Self-employed Home Loans

Written by Beth Hrusch
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Being self-employed does not necessarily make it more difficult to get a home loan. The main hurdle to face if you work for yourself is the fact that you have no boss who can verify your income to a loan officer. This means that you will have to make sure you bring plenty of income documentation to the table when applying for a mortgage. A little bit of preparation will make the application process go more quickly and eliminates some possible headaches.

Some Tips for the Self-Employed

When looking to take out a mortgage, any borrower will want to get the best deal possible. A self-employed borrower will want to do the same, by shopping around for the best rate and gathering the information that will tell the lender that he or she is a good risk. It is a good idea to provide at least two years worth of personal income tax statements, business reports such as a profit and loss statement and a balance sheet, plus the phone number and address of your landlord. The lender will want to make sure that you are paying bills and rent on time.

Anyone self-employed for less than two years may need to either provide a higher down payment on the home being purchased, or agree to take out a B paper loan. This refers to a loan that is given to people with bad credit or other issues that make them a higher risk to the lender. This type of loan will come with a higher interest rate and possibly more points, but it can be refinanced later if there is a good repayment history.

Other options for the self-employed can be explained by a lender who is experienced in handling these loans. With a good credit history and proof of financial health, any self-employed person can get the best possible deal on a mortgage. The key is to prepare for the application process and research the best terms and rates. Letting your business pay for your home is one way to build equity while building your professional reputation.

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