Buying a home can be a frustrating and involved operation, and some additional hurdles can be thrown in the way by being your own boss. Let ‘s explore some mortgage options for self-employed home buyers in Massachusetts or Connecticut to help you navigate the financing environment a little easier.
Set Your Expectations
It’s crucial that you take time to realize that you are in a hard situation from the very beginning of your mortgage journey.
In order to decide whether they believe you are in a reliable financial position, lenders may scrutinize both you and your business, and they will provide you with little-to-no risk for home financing.
This means going out of your way often to be as straightforward as possible to develop their trust in you and your business. Your average mortgage lender would be much more likely to lend to self-employed home buyers who have been self-employed for at least two years and can show a consistent degree of profitability in their companies, if not growth.
Weigh All Opportunities
Not all mortgages and lenders are alike, and any option open to them needs to be carefully considered by all home buyers.
This means investigating individual lenders and their current advertised interest rates, and figuring out which duration of the loan would fit best for you. Without paying attention to another chance with an entirely different lender that may have worked more to your benefit, it can be very tempting to take the advice of family or friends. For self-employed home buyers, this is an particularly significant thing.
Instead of finding yourself down the road with regrets, make the effort to do your homework carefully in advance and remove the risk of these potential headaches.
Clean up Your Credit
You want to submit your free annual credit report from the major credit rating agencies, no matter what form of mortgage or lender you select to seek.
When you receive the credit reports, comb very carefully through every detail to ensure that there are no mistakes or debts that you might have missed or neglected in your history. It is not unusual for a mortgage borrower to find that even tiny debts that have either built up over time or languished, steadily eating away at their credit score, have been left behind.
When you begin your application process, you want to get the highest possible credit rating to help secure a lower interest rate, which over time will save you a significant amount of money.
Provide Thorough Documentation
It’s a smart idea to take the time to compile a packet of details that your mortgage lender is certainly going to request in preparation for submitting your application.
Being self-employed implies that to validate your stable profits, you do not have the normal history of pay stubs from a typical employer, and your lender will understand this. To compensate, it’s a good idea to include federal tax returns, a list of debts, and a list of assets for at least the last two years.
Finally, a federal 1099 form, also known as a profit and loss statement, is a good idea to go ahead and fill out.
If All Else Fails
A last last-ditch attempt could be to apply for a personal loan if you find yourself in a position where there are not many lenders willing to fund someone who is self-employed, or your applications are being rejected across the board.
A personal loan could be used to cover up a hole in your finance, though not nearly as appealing as a mortgage. Bear in mind that an intensive vetting process will require personal loans which will be filled with shorter repayment periods and higher interest rates.
Finally, a personal loan would yield a much smaller amount of cash, so run the calculations and be prepared to pay yourself for the difference.
Professional Guidance for Self Employed Home Buyers in Massachusetts or Connecticut
We appreciate the particular challenges faced by self-employed home buyers.