While traditional 9-5 jobs have been taking quite a hit over the past few years, more individuals are turning to a creative combination of self-employment and part-time positions.
Yet, before you step into your new position, self-employment may affect refinancing a home or securing a loan. Before you step into your newly created position, here’s what you need to know:
• You must have two years of tax returns (24 months of self-employment history) in order to submit a loan application as a self-employed borrower.
• The lender first looks at adjusted gross income (AGI) on your personal tax return.
• If your median credit score is 740 or greater, then a conservative gross monthly debt to income (DTI) ratio to qualify for a mortgage is 35%. This means your total monthly expenditures for must not exceed 35% of your gross monthly income. Taxes and insurance on your home will be included.
• If business tax returns are required, income, assets and liabilities have no direct effect on the successful completion of a home mortgage.
If you are going into business for yourself, then purchase or refinance your home before you give up your W-2 income-producing job, or attempt to maintain your W-2 income producing job while establishing your 24 month self-employment history. As you are beginning to build your business, reduce as much debt as possible and maintain a high credit rating.
Do you need a plan to move to secure a mortgage as a self-employed borrower?
ADR Mortgage and The David M. Damare’ Team remain independently owned and operated, accepting nor requiring any government assistance. We are a boutique lender operating in many states with low cost, the savings of which we pass on to our clients and a penchant for platinum customer service that ensures our continued success and livelihood.
“Mortgage Lending is Our Business: Customer Service is Our Passion.”
Stay tuned and stay in touch with your mortgage professional. Thank you for the opportunity to serve you. David. 919.851.0999.
Raleigh Mortgage Man, NC Mortgage Man, Triangle Mortgage Man, Triangle Mortgage Expert all owned and licensed by David M. Damare’. All rights reserved.
