Applying for a Self Employed Mortgage
One of the most common issues self-employed people have to manage is that banks don’t always recognize that their documented income is the net of expenses used to reduce overall taxable income. When considering you for a mortgage, the banks will look at your:
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Credit score
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Income
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Down payment percentage
To verify these factors, the bank requires certain documentation. Some of the documents that you have to provide for the lender or bank are your most recent years of tax returns. As a self-employed person, your tax return may show a significantly lower income than what you actually take home based on tax deductions you’ve taken and other factors.
How to Get a Self Employed Mortgage
Based on the factors the bank considers when approving mortgages, the top 3 ways you can get rejected for a mortgage are:
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Insufficient income
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Poor credit history
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Too small down payment
To most easily wade through these difficulties and get your mortgage approved, you should schedule extra time with a mortgage professional when preparing to purchase a home. This extra time can mean months or even years depending on your financial situation. By allotting extra time to prepare, your mortgage professional at Regional Mortgage Group can help you strategize and avoid the headache that many self-employed individuals often face.