Work for yourself? Need a mortgage? Here are three tips on home loans for self employed buyers .
If you are self employed, you know how tough it is in Tooele UT to borrow money at a reasonable rate. There are tons of hoops to jump through, and a pile of questions that need answering. It’s almost as if no one wants your business, and makes things as difficult as possible to get a mortgage
If you are self-employed, either as a contract worker, commission salesperson or as the owner of your own Tooele Utah business, your income can fluctuate greatly from year to year. That can make it difficult to get approved for a mortgage.
But there are some things you can do to help your chances.
As promised, here are 3 tips on home loans for self employed buyers
Keep Your Credit Score Is In Good Shape
Your ability to pay the loan back on a mortgage is the primary factor in getting approved.
Your credit score is a close second. (this is true for every borrower, not just those who are self-employed.)
A credit score in the high range — something above 740 or 760 — will help you get approved for a mortgage. (or any type of loan for that matter).
To boost your score, make sure you:
- Pay all bills on time,
- Pay down your debt levels
- Don’t make any new big purchases
- Don’t apply for new credit soon before you apply for a mortgage.
The More Money Down The Better
The more the lender is asked to loan you to buy a house, the more risk it is taking. Their biggest concern is, will I get my money back? . History has shown these lenders that If you are self-employed you are considered a higher risk to begin with.
One way you can eliminate some of that risk is to be able to put down a large amount of money. It’s what they like to call, spreading the risk & you having skin in the game. Putting down 20 percent is standard for a conventional loan, and in a perfect world you should be willing to contribute at least that much. The world isn’t perfect and you may be willing but not able.
This is an area you should talk to your agent about and have them help you find a lender with special programs to help folks like you.
As an example, in Tooele County there are still funds available in a government HUD program that offers 100% financing for approved buyers. Since the program was designed to encourage development in rural areas, we think that because of our growth we soon not be considered a rural community.
Make no mistake, putting down at least 20 percent will save you money in the long run, because you won’t have to pay for mortgage insurance and you will pay less in finance charges over the life of the loan. But….. In a market like this and interest rates still exceedingly low. Get in the game any way you can.
Within reason of course!
Show off Your Assets
One way to put a lender at ease about your ability to pay for a mortgage is to mention all significant reserves in the form of assets.
If you have large amounts of money in regular savings, brokerage and retirement accounts, it offers a reserve for you to tap should your income take a dive.
Other forms of property, such as personal and business property that has value, also helps establish you in the lenders mind as a serious borrower.
I know this was basic stuff, but if you are still with me and want to explore more, take a look at these articles from other REALTORS from around the country., that may have a more in depth, look or different slant at the problem.
Feb 18, 2015 … The (sometimes) unreliable income of the self-employed can make it difficult to get a loan. Here’s how to make sure you can.
Aug 10, 2017 … Recently, Fannie Mae issued new loan guidelines related to self-employment income. Some of the highlights include a documentation …
So there you have it. My take and three tips on home loans for self employed buyers. Plus I’ve thrown in a few articles from outside sources and a link to other stuff I have published @ Berna talks Home financing.
Have questions? Call me Berna Sloan 435-840-5029.