Self employed people have different issues to face when trying to get a mortgage. If you are a freelancer or an entrepreneur, you know that your income can fluctuate regularly and this can be an issue if you want to get a mortgage approval. But of course, there are still things that you can do to improve your chances at getting a mortgage. Here are some tips:
Good Credit Score
Sure, a stable income is a major determinant to your success in the mortgage application process, but it is still worth noting how big of a role your credit score plays in your loan application. This is one truth that doesn't only apply to self employed people, but to every mortgage applicant as well. So if you aim to have an increased chances of getting a mortgage, make sure that your credit score is in good shape - somewhere around 750 if possible. To get to that score, ensure that all your bills are paid and are paid on time. Also, avoid making large purchases while you're still trying to get an approved mortgage.
Big Down Payment
If you are a self employed individual with fluctuating income, the best way to lower the risks lenders has with you as their client is to drop a large down payment. That way, lenders have lower chances of losing money in case things go for the worst in the future.
Reliable Assets
You can put lenders at ease if you have significant assets under your name. This can be in the form of money in a savings account and this can also be in the form of brokerage and retirement accounts. Personal and business properties that has been paid off would also help.
As a conclusion, getting a mortgage in general requires lots of proving. Whether you are an employed or a self employed individual, it all boils down to one thing, and that is to prove the lenders that you can afford the monthly mortgage payment and that you are a financially responsible person.
