With the effects of the subprime mortgage crisis still resonating in the minds of lenders, obtaining that elusive mortgage loan can be extremely challenging for people from all walks of life. Furthermore, this unfortunate precedent resonates especially true for mortgage loans for self-employed people.
Regardless of the fact that there are over 9 million American citizens who are considered self-employed these days, traditional 9-5 workers tend to be more appealing to lenders who are desperately trying to keep their reputations intact. Regardless of the amount of income being generated, most self-employed borrowers are viewed as a risk. This is primarily due to a lack of a defined and guaranteed salary.
Although there may be obstacles to overcome, it is usually possible to find an ideal home loan without gouged interest rates or unmanageable payment plans. Prime borrowers with clearly verifiable income are usually the ones who get those low interest rates you see advertised, but with some simple planning and research there is no reason a responsible and reasonably profitable self-employed person should not be able to find a mortgage loan that they are satisfied with.
The first step is to make sure that you have all of your paperwork in order. Being able to prove that you can afford to make payments on time is absolutely essential. Of course, if you're not quite positive that your independent business is going to sustain current living costs and your mortgage payments, it may be prudent to reconsider your plans. Confidence from both sides is the key to any successful business relationship – especially when there is a long-term agreement being made.
Lenders are looking for stability as a priority. It is up to you to present clear documentation that proves that your source of income is just as reliable as any employee who works for an established company. Generally two years...