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.
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