If you are self-employed and want to purchase a home, it is possible to apply and get approved for mortgage financing
. However, unlike traditional employment where you receive a W2 you can use to verify income, you will need a little bit more documentation.
Lenders want to see steady, if not gradually increasing, income for at least the past two years. They will ask you to provide tax returns showing your adjusted gross income. They may also require you to submit copies of bank statements and other types of documentation in order to verify and support the self-employment income you reported on the mortgage application.
In addition, you will want to make sure you have good credit. A good credit history demonstrates your ability to pay your debts from your self-employment income. If you have a business, lenders may review your business credit as well.
Other things that can make getting approved easier include:
- Having a sizeable down payment. The more money you can pay down on the home, the better. This shows lenders you have a financial stake in the home.
- An emergency savings fund. Lenders will want some reassurance you can make mortgage payments for those times when your work may go through seasonal slowdowns.
- Having a co-signer with a “regular” job. Lenders are more likely to approve a mortgage when there is a secondary source of income supported by W2 employment.
To learn more about what home loan types you could qualify for using your self-employment income, please feel free to contact Elite Financial at (800) 908-LEND or (805) 494-9930 to speak with a representative today!
If you want to lower your monthly mortgage financing payment
, loan refinancing may be right for you. There are a few different ways of refinancing could help reduce monthly payments. Refinancing is not a second mortgage but applying for a new home loan to pay off the existing home loan.
There will be costs associated with closing on the new loan since you will need to close on the loan, just like you did when you purchased the home. You may also have to get a current appraisal of the home. It is important to make sure you understand the costs associated with refinancing when choosing a refinancing option that is best for you:
- Refinance for a lower interest rate while keeping the same number of remaining payments as the original mortgage. For example, if your current interest rate is 6% and you can refinancing at 4%, without altering the repayment period, your monthly payments will go down since you will be paying less interest.
- Refinancing the repayment period on the existing loan for a longer period. For instance, if you initially have a 15-year fixed rate loan, refinancing to a 30-year fixed rate loan will lower the monthly payment. Just keep in mind, you could end up paying more in interest because the loan is much longer.
Depending on your financial situation, there could be other refinancing options available which could help lower your monthly payments. To learn more about these or to apply for refinancing on your home, please feel free to contact Elite Financial at (800) 908-LEND or (805) 494-9930 to speak with a representative today!