Sunday, April 17, 2011 - Article by: Joe Metzler, MLO. NMLS #274132 - Mortgages Unlimited, Inc -
Self employed individuals often ask ... "Why is it so difficult to qualify for mortgage financing?"
Minneapolis, MN: Self-employed borrowers, those who work on commission, or those who receive tipped income present one of the most challenging areas of mortgage underwriting. Qualifying self-employed people often requires significant extra time, energy, and patience. A fair and honest pre-qualification requires a special set of Loan Officer skills and expertise.
Long gone are the days when any Loan Officer could give a low doc, no doc, or stated income loan to a self-employed borrower, commission, or tipped income client without any training or special consideration.
Generally speaking, it's tougher for the self-employed buyer to qualify for a mortgage because it is hard to answer the question: "What is your income?"
What did you earn, what did you write off? Taking advantage of tax laws to reduce income is great for reducing tax liability, but also shows you make less money, making a potential home mortgage loan approval difficult.
Next lenders are looking to see a income history. Is income increasing, decreasing, or stable? This all comes into play for self-employed, commissions, and tipped income home buyers and those same type clients interested in a refinance of their existing home loan.
Today, lenders are back to the old way of providing mortgage loans, and the vast majority of Mortgage Companies, and especially Mortgage Loan Officers are either afraid to work on a self-employed persons home loan, or simply lack the extra knowledge and skill required to get self-employed people a home loan.
Reading, understanding, and qualifying a buyer off of tax returns is not for the weak of heart, or unlicensed bank reps working at a call center. Make sure you are working with a self-employed loan expert.
Self-Employed and Commissioned DOCUMENTS REQUIRED:
Be prepared to send us the following documents. We will be unable to assist you or evaluate you mortgage loan qualifications without them:
We will also require the traditional standard home loan approval documents:
LESS THAN 2-YEARS SELF-EMPLOYED? YES, it is possible... <span style="text-decoration: underline;">But it is an exception</span> and NOT easy to get approved. You will need to have worked in the exact same field, with a similar income, and have at least 1-yr of self employed Federal Tax Returns
Didn't find the answer you wanted? Ask one of your own.