How to Qualify for a Mortgage When You’re Self-Employed

How to Qualify for a Mortgage When You’re Self-Employed

Anyone gearing up for a mortgage application is going to take some time to prepare their information, gather necessary documents, and comb through their credit reports. However, for those who write their own paychecks, the process can be a little trickier. With a few more hoops to jump through regarding income, credit, and borrowing in general, the lending process can easily deter any self-employed mortgage applicant. So, here’s our guide to qualifying for a mortgage when you’re your own boss.

Adequate Income

Although writing off expenses decreases your taxable income, it also decreases your provable income. Lenders don’t care about your gross earnings; they care about the number that you take home, which means you’ll have to prioritize whether you want to save more on taxes now or qualify for a home later. If you want your mortgage application to look its best, you’ll need to show that you have as much net income as possible, even if you’re going to pay a little more in taxes.

Necessary Documents

When applying for a mortgage, salaried workers must provide W-2’s and their personal tax returns for the past two years to show that they have both adequate and constant income. Self-employed borrowers must provide the same items as well as their business tax returns (all schedules) for the past two years.  If they are a sole proprietor, the schedule C in their personal returns would be sufficient.

Lenders don’t deny applications for having too much proof of income, so save any business documents that you feel may be beneficial to your mortgage application.

Borrowing History

Credit plays a big part in mortgage qualifications whether you’re self-employed or not. Therefore, it’s essential that you work to lower your debts and improve your score as much as possible before you begin the home buying process. Since your financial history will be under a microscope when applying for a mortgage, you must examine each of your credit reports, avoid closing or opening any new accounts, and continue making timely payments on each of your existing ones.

Down Payment

As a self-employed borrower, you don’t have to put more money down to walk away with the same deal as a salaried applicant. However, most lenders are much more likely to approve loan requests when the applicant is willing to put down more money because it minimizes the likeliness of a mortgage default. Therefore, while you’re planning to purchase a home, consider saving up for a larger down payment to strengthen your application.

Proper Planning

Buying a home isn’t a spur of the moment decision, which is why you should start planning now. By teaming up with the professionals at Butler Mortgage, you can prepare for your purchase to be way ahead of the application game. Whether you’re self-employed or in a salaried position, our team of loan experts can guide you to the best decisions for your long-term purchase and financial future. Contact our team for a free consultation by calling 407-931-3800.

How to Get a Home Seller to Pay Closing Costs

How to Get a Home Seller to Pay Closing Costs

When buying a home, many people worry about being able to pay the initial out-of-pocket costs. With the burden of having a large down payment, the extra closing costs can cause people to have to wait on buying their home. However, it can work out in the best interests of both the buyer and seller for the seller to pay the closing costs of the property, helping you complete the sale. Keep these scenarios in mind so that you can get help paying your closing costs.

Give Them What They Ask For

Sometimes, making an offer at (or near) the seller’s asking price can benefit you more than offering a lower price point. If the seller is looking for a minimum amount of profit from the property, meeting their asking price could make the seller more likely to help out with closing costs. This way, you can incorporate the extra cost into your mortgage and spread it out rather than paying it all upfront.

Help Their Timeline

Another time that the seller would be open to helping with closing costs is if they are looking to move out and get the deal done quickly. If they have already begun a mortgage on a new home, speeding up the sale process is in their best interest, and they would be far more likely to help you out with any closing costs. A seller would also be open to helping pay closing costs if you are willing to accept the home as it stands without causing trouble during the inspection period. A little give-and-take in this area can go a long way in your negotiations.

Work With a Real Estate Professional

While getting a seller to pay closing costs is very common to mortgage transactions, in most cases, you would benefit greatly from having a real estate professional go to bat for you.  We recommend working with a Realtor for many reasons.  Among those reasons is that they are trained to negotiate and know how to take the emotion out of the process.  Their goal is to get the best deal for their customer and studies have shown that buyers and sellers alike benefit from working with such professionals.

Mortgage Experts in Central Florida

Buying a home is an exciting event, but it can come with a lot of stress when figuring out how to finance it all. Here at Butler Mortgage, we have been helping families for over 25 years!  Let us help you navigate the loan process and make sure you end up with the home of your dreams. Contact us today at 407-931-3800 and get a free consultation.