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Tips for Getting a Mortgage When You’re Self-Employed

August 22, 2022

For those who are self-employed and searching for a home, you’ll need to be extra prepared. Before you contact a real estate agent in Columbus GA, you should probably gather together all of your paperwork. We’ll give you an idea of what you’ll need so that you can wow the lenders with your documents and budgets and more so you can get that new home.

The difficulty is that self-employed workers don’t always have the same stable income as traditional workers. Income may vary from month to month and lenders want to know that even with fluctuations, you can still afford your mortgage payments.

By getting your finances and papers together before you start, you can see clearly what your budget is. You should also do your research into what lenders will most likely want from you, as well as the types of loans you’re more likely to get.

Keep in mind that you’ll probably need a higher credit score and you may need to make a larger down payment. In fact, the larger the down payment, the better you look to lenders. Your debt-to-income ratio should also lean heavily in favor of income. If you can pay off some debt, such as a car or credit cards, that will leave you with more money available monthly, which will look good to lenders.

You’ll also need financial statements showing your stability and may need to show proof of self-employment. Hopefully you have an accountant, because they should be able to help you show your stability and profit and loss statements, among other paperwork. You’ll also need to show your bank statements, personal and business tax returns, and financial assets, especially liquid assets. The process is more invasive and asks more of you, but at least you should get a new home at the end of it all.

Be realistic in what you can afford, especially should you have a lean period. In addition, most lenders will probably only want to offer a mortgage for the lower end of your budget. Fortunately, your real estate agent should be able to help you find the right home in the right neighborhood within your budget, which will still have a likelihood of helping you develop more equity in your home.

Finally, shop around for a mortgage that is best for you. A 30-year fixed rate is the most common and usually most affordable on a monthly basis, depending on the rate  you lock in at the time. If the rate is high but seems like it may drop, you could go with an adjustable rate mortgage for the time being. Also, look into FHA, VA and USDA loans, as they may give you a better chance of getting a mortgage if your finances aren’t as strong as you need.

As always, shopping for a new home should start a year or more in advance if your finances need work. If you’re confident with your income, money available for a downpayment, credit rating, and overall solidity, then contact one of our real estate agents in Columbus GA. We’re happy to work with you to find that perfect home with its own dedicated office where you can continue to grow your business in the comfort of your new home.

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This post was written by Rose Anne Erickson

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