Entrepreneurialism is alive and well in the US. According to the Bureau of Labor and Statistics, just over 10% of the American workforce is self-employed. In Arizona, it is 10.3%. Many of these people want to be homeowners in 2018. Sometimes, this gets a little tricky. If you're your own boss and want to purchase a property, here are a few mortgage tips for the self-employed Havasu home buyer that you should look at first.
Mortgage Tips for the Self-Employed Havasu Home Buyer
Whip Your Credit Into Shape
Lenders scrutinize credit scores as part of the home buying process. Your credit needs to be in the best shape possible. If it's low, hold off on the Havasu home search until you bring it up to snuff. Request your credit report from TransUnion, Equifax, and Experian. You can do this for free via www.AnnualCreditReport.com. Look them over carefully for errors. If you find any, visit the agency's website(s) to find out how to dispute it. Lenders use the middle score out of the three reporting agencies. It's best to clear up everything you can before you start shopping around for a mortgage.
Check Your Tax Returns
As a Havasu home buyer, you're going to need to provide proof of income. This might be more difficult for the self-employed. It can vary from month to month. Also, if you claim a lot of deductions, your adjusted income may not be enough to support a home loan. Lenders will want to see your last two tax returns.
Pay Down Your Debt
One way to boost your attractiveness to lenders is to pay down your debt. Lenders want a Havasu home buyer to carry no more than a 43% debt-to-income ratio (the amount of debt you have compared to your earnings). Your debt includes your mortgage payment, insurance, credit cards, student loans, car loans, etc. Don't close any old open credit accounts that are paid off, however. Doing so may increase your debt-to-limit ratio, lowering your credit score. Talk to your lender to find out which creditors you should concentrate on first.
Assess the Assets
Sometimes, your downpayment isn't enough to assure lenders that you're ready to take on a mortgage. Take time to list all your business and personal assets. These include any IRAs, investment accounts, "emergency funds", office equipment, etc. Present this list to your lender and be prepared to provide any other documentation they require as proof of these assets.
Follow these mortgage tips for the self-employed and you'll become a Havasu home buyer before you know it. Contact me when you're ready to start looking for your next home.