Qualifying For A Mortgage When You Are Self-Employed

If you are like the majority of homebuyers, a mortgage will be an essential line of credit for making this purchase. For those that are self-employed, there are some key facts that they should keep in mind about this process.

It Is Possible For Self-Employed Individuals To Obtain Mortgage Financing

It can be a common assumption for people to think that it will be impossible for them to obtain a mortgage if they are self-employed. However, it is entirely possible for these individuals to qualify for this type of financing. Generally, the challenge will come with providing proof of the stability of their income. As a result, those that are new to being self-employed may find that it can become significantly easier to qualify for this type of loan when they have been successfully in business for at least several years.

Larger Down Payments May Be Very Beneficial To Those Needing A Self-Employed Mortgage

To help reduce the amount of financing that is needed and to increase your chances of being qualified for a loan, the down payment that you are able to make for the property should be maximized as much as possible. This will reduce the total amount of money that you will have to borrow for the house, and it can also help with keeping the interest, origination, and other fees associated with the mortgage as low as possible. While maximizing your down payment could require you to spend a little longer saving for this purchase, the long-term benefits can be substantial over the lifetime of the mortgage for the property.

Individuals Should Always Have A Plan For Times When Their Income Source Is Interrupted

Your mortgage is a loan that you will be paying off for many years. As a result, it is important to make sure that you are prepared for the potential times when your income could be interrupted as you will need to be able to continue making payments on the mortgage. For those that are self-employed, this can often involve creating a savings fund that will be large enough to allow for numerous months of no income. This can allow you to have a buffer so that you will be able to transition to new work without having to fall behind on your mortgage payments. In addition to mounting late fees, this could eventually lead to foreclosure of the property, which could be a disastrous financial and emotional situation to face.

To learn more about self-employed mortgages, reach out to a lender near you.