Hi everyone, I’m Bette Hochberger, CPA, CGMA, and on last week’s #FinanceFriday, I brought on Mike Collada, the Production Manager and Sr. Loan Officer for OnMortgage. We will be discussing self-employed mortgages. Mike will also be giving some tips and tricks for new self-employed borrowers.
Self-employed mortgages are designed for individuals who work for themselves and may not have the traditional proof of income required to qualify for a standard mortgage. When applying for a self-employed mortgage, borrowers will need to provide documentation of their income and expenses, such as tax returns and bank statements. Lenders typically look at the borrower’s net income, which is calculated by subtracting business expenses from gross income.
One crucial factor to consider for self-employed mortgages is the borrower’s credit score. Lenders use this score to determine the borrower’s creditworthiness and the interest rate on the loan. A higher credit score can lead to better loan terms and a lower interest rate, making it important for borrowers to focus on building and maintaining a strong credit score.
Another critical factor is the size of the down payment. While it’s possible to qualify for a mortgage with a smaller down payment, having a larger down payment can improve the borrower’s chances of approval and lead to lower monthly payments. It’s crucial for self-employed borrowers to work with a lender who has experience working with self-employed individuals and can guide them through the process of applying for a self-employed mortgage.
In summary, self-employed mortgages can be a great option for those who work for themselves and want to purchase a home. By working with a knowledgeable lender and providing the necessary documentation, borrowers can improve their chances of approval and secure a mortgage that meets their needs. If you want to learn about the best ways to set up your business so you can lessen your taxes, set up a meeting with me.
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