Getting a commercial mortgage while you are self-employed can be extremely difficult. Even if you have all the documentation, a lender asks for; they may still turn you down. If you want to buy a home, your work is cut out for you. The key is to know what you are financially capable of and then gather all of the documentation you need to verify and support your records. Most lenders require two years of federal taxes or financial records. Being self-employed, you may want to show three years to prove stability.
Get Your Financial Paperwork in Order
Get all of your documentation in order. This will include your business paperwork as well. You need to provide accurate documentation on how you pay yourself and what other personal and professional expenses you may have. Most lenders will go over all the information you provide them with a fine-tooth comb. Make sure you cover all your bases. If you have any gaps at all, it may stop the loan process.
Know What You Can Afford
Before you make any major purpose, including a home, create a detailed budget. You will need to know what you can afford. Including as much information as possible is essential, and setting money aside for emergencies or unexpected expenses is vital. If you are employed on a seasonal basis, you will need to create a monthly average the bank can use to estimate your creditworthiness and ability to pay from month to month. Your debt-to-income ratio is an essential piece of information.
Find a Lender Who Will Work with You
It’s essential to find a lender who will work with you. Veterans can usually work through the Veterans Administration. FHA, Fannie May, and Freddie Mac are options many people choose if they are first-time home buyers or have decent credit. If you do your banking at a credit union and have been with them for several years, they can provide you with an affordable mortgage. If you have your business accounts with them, they will already have most of your information. You will need to verify it.
Get Pre-Approved
Before looking for a house, know what you can afford and get pre-approved by your lender. This will save you time in the long run and will make the closing process smoother. Once pre-approved, you will receive a letter stating how much you can borrow. When you bid on a home, you can offer the letter as proof of financial responsibility. This shows the seller that you can follow through with the deal if they choose to accept your offer.
Final Thoughts!
Understanding what banks expect from you is important if you are self-employed and want to buy a home. Being able to give them the information they need makes their job much easier. Contact the professionals at Fidelity Mortgage Lenders today to learn more about what it will take to buy a home if you are self-employed.
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