Boca Mortgage Blog

It's pretty evident that self-employment has skyrocketed in the past few years. Some even claim it may be on the road to becoming the new normal. Many opt for this less conventional lifestyle for its freedom in time and dress code. No pant workdays? Sign us up. The downfall, however? Qualifying for a mortgage.

While qualifying for a loan under self-employment is difficult, it's not impossible. All it takes is a little ingenuity and advance planning on your part to convince the banks you're one-man business is financially sound.

Take Advantage of Tax Write-Offs

You're probably doing so already, but if not, take advantage of what constitutes as a tax deduction for the self-employed. Business dinners, retirement plan funds, business expenses, and interest on business loans are all tax deductible to help your small business out come tax time. However, mortgage underwriters typically look at tax returns as a proof of income. While not all mortgage lenders understand this, a growing percentage do. Some mortgage lenders will allow certain deductions to be added back in the income. Keeping records of these write off's as well as receipts can help plead your case when consulting with your mortgage broker.

Plan Ahead and Take The Long Route

Due to the unconventional nature of self-employment, less than conventional tactics will need to be taken. The self-employed will need to plan ahead longer than most mortgage borrowers before buying a home. One way to do this is by writing off less expenses leading up to the home buying purchase. Separate business expenses from personal ones with a business credit card and use it for more expensive business purchases, such as a new computer.

Prove Your Business' Growth

Nothing makes a mortgage lender happier than knowing that the loan they lend out will be coming back to them. And few things prove this more than seeing a client's assets increase in value. Lenders will ignore the usual seasonal peaks and troughs in income, but will perk up when they see a continual trend in growth year after year.

Enlist The Help Of A Co-Signer

Sometimes, creativity and technique just won't push a mortgage lender. If this is the case, then enlisting the help of a co-signer to back you up on your behalf. Another idea is to lower your loan expectations and seek a smaller loan you do qualify for and think about investing in a townhome or condo instead. Again, sometimes you have to go the long route.

Alternative Income Verification Loan

Think of the alternative income verification loan as the sister to the stated income loan. Not everyone offers these just yet, so do your research in finding a mortgage broker who offers such a loan. At Alternative Mortgage Group, we offer stated income loans and are more than happy to assist you. This sort of loan is verified by using 12 months of business bank statements and personal bank statements.

Posted by Leonard Silvestri on August 18th, 2015 12:22 PM
Stated income home mortgage loans have made a comeback as mortgage lending companies cannot ignore loan-seeking customers any longer. 

Besides asking for high down payments, lenders check potential clients' assets to cover anywhere from six months to a year of payments. Some lenders stick to the belief that stated income home mortgage loans could easily be abused through falsified bank statements- the number one reason why major banks refuse to offer these types of loans. In order to distance the new loans from the stigma brought on by the housing crisis of 2008, the loans go by other names such as "asset-based loans" and "alternative-income verification loans".

Stated-income loans are best fit for small business owners who may be perfectly able to repay a loan, but whose income tax returns may not accurately depict that. 
Posted by Leonard Silvestri on January 13th, 2015 4:57 PM

Archives:

My Favorite Blogs:

Sites That Link to This Blog: