Being self-employed is the dream of many, and if you’re already there, you have what everyone else dreams of achieving. However, trouble sets in when you need to acquire self-employed mortgage loans. It becomes more challenging to prove your financial stability to your potential loaner. That shouldn’t stop you from trying to acquire your dream house. There’s more you can do to get your mortgage loan just like the employed.
5 Things You Should Know and Do to Get a Mortgage when Self-Employed
The thought of acquiring a mortgage loan when self-employed shouldn’t throw you into a resentment mood. Here are five things you should know and do when trying to get self-employed mortgage loans.
- Clear Your Current and Pending Debts
Since your business has uneven cash flows and your bank won’t trust your financials to give you a loan, you need something convincing your financier to fund your mortgage. Clearing any other debt you have, both in your business and personally, gives you a good reputation before your financier.
Your lender will mainly concentrate on your credit score to qualify you for the loan: the higher your credit score, the higher your chances of getting your mortgage financed. You’ll also enjoy lower interest rates that will save a significant amount of money over the loan’s lifetime.
- Save for the Down Payment
If you’re already saving, continue saving up so you can pay a bigger portion of the down payment once approved. The more you can pay at the onset of your loan, the less you’ll have to borrow and the more attractive you become to your lender. Your lenders can give you better loan terms in the long run, and that saves you more money.
- Consider Going for Pre-Approval
Getting a pre-approval letter from a lender can be a crucial step to make in your mortgage acquisition journey. You can go through pre-approval with several lenders to shop for favorable mortgage rates and settle for the best loan deal. A pre-approval process will help you understand how much you qualify for and list all the loan requirements to help you get organized. With pre-approval, you’re several steps ahead into the loan acquisition journey as it simplifies the whole process.
- Provide Necessary Documentation
You’ll still need to prove all important events in your business that will support your mortgage loan acquisition. Your lender wants to know if they can trust you to pay the loan once processed. The following documents will help them process your loan with little to worry about.
- Bank statements
- Your assets lists
- Extra income sources
- Lists of debts and monthly payments
- Proof of your business, i.e., licenses, permits, etc.
- You should Invest Enough Time.
Consider working in your business a couple of years before you consider buying a home through a mortgage. The longer you take in business before applying for the mortgage loan, the better your financial proof gets. You will get a longer history of tax and banking documents over the period that will help your lender get convinced easily.
Getting self-employed mortgage loans is always easy if you have the right requirements and work with the best lenders and financial advisors. Established mortgage financiers like Blake Mortgage helps you to understand your loan requirements and establish a suitable loan that matches your business’s strength. Consider working with the best team when applying for your next mortgage loan.