Buying a Home If You’re Self-Employed
I recently purchased a home, and as I am self-employed I was a little bit weary about getting financed for a mortgage. To say the least, they put me through the wringer! After asking for tax returns, bank statements, etc. I thought they were going to ask me for my fingerprint, my DNA, and a strand of hair! If you are self-employed, it is possible to purchase a home using traditional financing, however here are a few tips:
- Document, Document, Document!
Any income and expenses that you have must be documented; There has to be a paper trail for absolutely everything because the underwriter WILL ask for it.
They will look at your credit along with any outstanding debts. Under certain circumstances they may ask you to either pay off a debt or close an account completely; they do this to ensure that the debt-to-income ratio meets underwriting standards. Now, I know that closing accounts may appear alarming, however, check with your loan officer as he/she may have access to a program that will predict what will happen to your credit score if debts are paid and/or accounts are closed.
- Have Patience
This will likely be a frustrating process. However if you follow these tips and exercise a lot of patience, it will help you get through the process.