Best of Q&A: We Are Self Employed, Will We Be Able To Get A Mortgage?
Each week we feature some of the many questions that come in to the REALTOR®.com Q&A section. Today’s question comes from Baytown, TX:
Q: Will I be able to get a mortgage being self employed?
My husband and I have been self employed for three years and we both have credit scores in the 640-660 range. We have been paying down our debt and currently have a credit utilization of about 45%. Still have two credit cards to pay down. Our income is just under $30,000, is it likely that we will be able to get a mortgage?
A: There are many factors involved in getting a loan.
However, to answer directly your question, if you are self employed and your tax returns reflect your income needed to qualify, you should be able to get a mortgage. If you are interested, I can set you up with a mortgage professional who can answer all questions you have regarding mortgages. It certainly sounds as if you are doing all things correct.
– Linda Cottar, REALTOR®, Ingrid Nel Properties
A: For the self-employed that are considering purchasing a home it’s important to be aware of the changes that have occurred in the world of lending.
As everyone is well aware, getting a loan is not nearly as easy as it used to be. As you’ve found out, those who are self-employed are having a more difficult time borrowing money and must provide documentation that shows their income. The IRS is being contacted for income verification by many lenders and any fraudulent income claims are being dealt with.
In a nutshell, if you are self-employed and applying for a mortgage loan, be prepared and:
1) Line up all of your documents showing your income before going to apply for a loan. 2) Check your credit and do what you can to improve your credit score. 3) Pay your bills on time. 4) Most importantly, tell the truth, misrepresentation can cost you.
Many lenders are hiring more loan officers. They are convinced that current low rates are going to bring many more new and refinance loans in the next 18 months or so. Mortgage rates are at their lowest, closely tied to the unsteady economy where wary investors are putting their money in safe investments like Treasury Bonds. As these yields go down interest rate goes down as well. In other words, the unsteady global economy equals good news for the home buyer acquiring a mortgage and home owners who are refinancing their home loans.
Even though you are self-employed, as long as you can provide decent and accurate documentation there is no reason you shouldn’t be able to secure a home loan.
– Lee Dworshak, REALTOR®, Keller Williams LA Harbor Realty