3 TIPS TO HELP YOU QUALIFY FOR A MORTGAGE WHILE BEING SELF-EMPLOYED
People who are self-employed face unique challenges in getting approved for mortgages. One reason for this is because most self-employed individuals minimize their reported income for tax purposes. This can be great for saving money, but not so great when applying for a self-employed mortgage, as most lenders use a borrower's income as a prime indicator of an applicant's ability to repay their loan. Fortunately, there are a few steps you can take to improve your chances of getting approved for a self-employed mortgage. Here are three ways to make your mortgage application more attractive to banks, credit unions, and other prime lenders.
1. Review Your Credit History
Since prime lenders reserve their best interest rates and loan products for borrowers with near-perfect credit histories, it's important to review your credit report before applying for a self-employed mortgage. If you have blemishes on your credit report, such as defaults or judgments, you'll need to resolve them. You should also correct any errors that you find on your file. After reviewing your credit report, you may find that you'll need to improve your credit score to be approved for a self employment mortgage. You can do this by paying your bills on time, eliminating any outstanding credit card balances, and clearing up any debts that have gone into collection.
2. Lower Your Debt-to-Income Ratio
Lenders use your debt-to-income ratio to assess your ability to repay your self-employed mortgage. The higher your debt-to-income ratio, the lower your ability to pay your mortgage is determined to be. Before seeking a self-employed mortgage, you'll want to ensure that your debt to income ratio is as low as possible. If you have taken out several personal loans, paying some of them down may help you get approved for home financing.
3. Get Help from a Mortgage Specialist
A mortgage specialist can give you valuable advice and suggest alternative lending solutions to help you get approved for a self-employed mortgage. Mortgage specialists can also provide ongoing support by reviewing your business finances several times a year and determining whether your home loan still works for you.
Getting approved for a mortgage while being self-employed can be difficult, but it's not impossible. Contact a mortgage specialist today to discuss your financial goals and develop a plan to obtain a self-employed mortgage.Request Mortgage Info
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