Getting a home loan today for a self employed person today has become one of the most challenging things to go through and all who try it need to have patience but be persistent. I often joke with several of my clients, the lender will ask you to prove everything and will ask you for almost everything including what color underwear one is wearing. Often they reply jokingly, what if you are not wearing any?
But in all truth, you will required to substantiate everything. Be prepared and here are a few pointers which may help you in going through the process.
- Borrowers who earn most of their income on 1099s should be prepared for extra preparation, paperwork, and discussion of their financial standing when applying for a mortgage.It’s important that
independent contractors show that their income is stable and increasing. For some, that may mean declaring all their income on their tax returns, and not, say, carrying anything over to the next year, even if it means paying more taxes.
- Consistency in income is key, so those applying for a mortgage this fall or winter should be prepared to provide proof for year-to-date income. To increase the chances of getting a mortgage approval, borrowers should pay off other debts, including balances on credit cards.
- Pinpointing the source of the down payment also is helpful. If the down payment will be a gift from a relative, borrowers are advised to submit an account statement showing the funds are available and awaiting the home purchase. Same goes for borrowing from a 401(k).
- Self employed borrowers also should be prepared for a more in-depth analysis of their ability to repay the debt. Submitting tax returns from the last three years and explaining any significant differences in income is advised.
Thank you for reading this post. If I can ever be of help in finding you the perfect property here in the Napa Valley, please email me at Curtis@NapaValleyAddress.com.
Your Broker Extraordinaire, selling Napa Valley Real Estate from its heart, Yountville.
My website & blog: www.NapaValleyAddress.com