Being self-employed has a lot of advantages, but a big disadvantage comes when you try to apply for a mortgage loan. It can be extremely complicated to buy a home without being able to show pay stubs from an outside source or a W2 form. When it comes time to apply for a mortgage, First Fidelis has some advice for all of you who are self-employed.
What You Need to Get a Mortgage
As a self-employed worker, you will need to be able to prove to a lender what your income is. The easiest ways to do this are to provide two years of tax returns or bank statements. Luckily for those individuals in the Kansas City Metro Area, First Fidelis only requires 12 months of bank statements for a mortgage loan.
While other companies require two years of statements and a number of other proof, including an accountant’s report, proof of regular work, good credit, and substantial deposits into the bank account, First Fidelis makes the process slightly easier for its clients. With First Fidelis, you only need to show a year’s worth of previous bank statements to prove your income.
It is true that a good credit score will help you boost your chances of getting a mortgage loan. The higher your credit score, the better your chances are. If you have a poor credit score, you might want to improve your rating before you apply for a mortgage loan.
How Does Your Business Type Affect Your Chances?
The way you have your business structured can have a great deal of influence on your chances of getting a mortgage loan.
When you set up a limited company, you keep your business separate from your personal affairs. A limited company needs at least one director and often a secretary. Directors pay themselves a salary plus dividend payments. You will want to make sure the lender takes both of these payments into account when assessing your mortgage loan eligibility.
Sole traders are individuals running a business on their own. Sole traders have an easier time keeping records, and the owner keeps all the profits. Lenders will look at these profits when assessing your income for a mortgage loan. You will want to have an SA302 form ready when you apply for a home loan.
Partnerships are formed when people go into business together. When the lender looks at your income, they will want to see how each of the partners split the profit. Your accounts need to show just how much you make to prove your income correctly.
If you are self-employed and looking for a mortgage loan in the Kansas City Metro Area, contact First Fidelis today at 913-205-9978. First Fidelis can help self-employed workers get the mortgage loan they are looking for without all the hassle another lender will put you through. Plus, they can help you get all the paperwork you need organized to get the mortgage loan you need.