As someone who is self-employed, you’re no stranger to the many obstacles you had to overcome in order to create a successful business venture. Thus, investing your money in rea estate will require considerable planning and research too. When homeownership is your primary future goal, there are 3 factors you need to consider in order to purchase the house of your dreams:
Factors That Could Facilitate Self-Employed Individuals Owning Homes
- Have your business finances organized – whether you’re a novice entrepreneur or you’ve been self-employed for several years now, you need to make sure that your business finances are well organized. This not only benefits you at tax time, it shows lenders that you’re smart with your finances and well-organized. Lenders commonly ask for multiple years of business records and tax returns. So if you have these in order, it will help you during the loan process.
- Have a solid financial history – having a small amount of debt and sufficient savings is always a plus when buying a home, especially if you’re self-employed. When you first got started, you might take out a loan for your business. Or maybe you have student loan debt. It’s important to address these issues and pay them down as much as you can before applying for a mortgage loan. Having a high credit score is also beneficial because it shows lenders that you pay your bills on time. Keeping your debt to a minimum helps your credit score as well. You might want to consider talking to your landlord about your home buying intentions and asking for a person reference regarding paying your lease or rent on time as well.
- Have enough saved up for a sizeable down payment – if there’s one thing every lender loves, it’s seeing that a potential borrower has enough money saved up for a large down payment, especially when that borrower is self-employed. Based on the nature of a self-employed Individual’s business along with the ups and downs that they encounter along the way, lenders view self-employed borrowers as a higher risk. So, the higher risk you are, the larger the down payment they’ll often require.
Most importantly, if you’re new to the self-employment game, you’ll probably have very little documentation proving that it’s been a successful endeavor than someone who’s been self-employed for 10 years or longer. The requirements for self-employed home loan applicants are much more rigorous than for those individuals who work for an employer. So be patient and diligent when responding to your lender’s requests.
Contact Your Colorado Mortgage Specialist Now!
To learn more about home loans for self-employed individuals, call Front Range Mortgage today at (303) 500-1900. Our company representatives would be happy to walk you through the process and clarify your doubts about the home loans and mortgages suitable for you. Call now!