Self Employed and want to buy a home???

Since the real estate shift of 2007 which caused lenders to re-examine the criteria and types of loans they offer to potential borrowers, the self-employed seemed to have gotten the short end of the stick with 'no-doc' and 'stated' loans all but vanishing for a while. With good reason, during the previous ramp up in the industry, these loans were used to inflate a borrowers' incomes to allow them to qualify for more house. The result is what we have now. While this wasn't the only cause of the meltdown, these loans were the most popular for fraud.

To obatin a loan being self-employed in this current market, documentation is the key! I polled all the loan officers on my FaceBook Page to see what their thoughts were, being on the inside and seeing the underwriter's objections and preferences on a daily basis. I'll post the results at a later date. Being an independent contractor myself, I can relate to the extra hurdles you have to go through to obtain a mortgage on personal and investment property.

Here are the best five tips that I've found online to make yourself an attractive candidate to a lender when you are self-employed:

Max Out Your Credit Score
In any type of borrowing situation, a higher credit score will make you a more attractive candidate to get the loan in the first place and to qualify for lower interest rates if you're approved.

Offer a Large Down Payment
The higher your stake in the home, the less likely you are to walk away from it in times of financial strain. Therefore, the bank will see you as less of a risk if you put lots of cash into your purchase up front.

Have Significant Cash Reserves
In addition to a large down payment, having plenty of money in reserves shows lenders that even if your business takes a nosedive, you'll be able to keep making your monthly payments.

Pay Down Your Consumer Debt
The fewer monthly debt payments you have going into the mortgage process, the easier it will be for you to make your mortgage payments. If you pay off your credit cards and car loans, you may even qualify for a higher loan amount because you'll have more cash flow.

Have an Established Track Record of Self-Employment
If you can show that you know how to play the self-employment game and win, lenders will be more willing to take a chance on you. Some advice suggests that you should have at least two years of self-employment history; other advice, however, says that when rates are low, you should try to get a mortgage as soon as you're ready, even if you don't have a long history of successful self-employment.

Be Willing to Provide Documentation
Being willing to fully document your income through previous years' tax returns, profit and loss statements, balance sheets and the like will increase your chances of qualifying for a loan.

You can contact me directly at rousereo@gmail.com to put you in contact with a loan officer to discuss what options you have to purchase a home when you are self-employed.