This month, we have another wonderful guest post from experienced blogger and home expert, Thomas Walker. Thomas will share a few helpful tips on how to lock in a mortgage as a freelancer, a question on many Nashvillian’s minds! If you enjoy his writing, check out his website: http://homesafetyhub.org/
When you work as a freelancer, trying to convince a money lender to give you a home loan can be challenging. Lending institutions prefer loaning to wage earners with steady employment. That said, it isn’t impossible to get a mortgage as a freelancer. As long as you plan ahead and prepare all the required paperwork, you should be able to win over your lender and prove that your income is relatively stable. Here are some resources to help you out!
Your First Steps
Before you get too far in the mortgage application process, research local home prices and contact a real estate agent (like the team at Oak Street Group) who can help you out!
- Get in touch with a real estate professional who can help you find a great home within your buying budget.
- Research the local housing market to get a ballpark idea of the kinds of homes you can afford.
Separate Your Business and Personal Finances
Establishing your business as a separate legal entity is best practice, especially if you’re about to buy a major personal asset like a home.
- Forming an LLC will prevent your business debts from hurting your personal credit and therefore your loan eligibility.
- Structuring your business as a separate legal entity will also limit your personal liability and protect your assets from business risks like lawsuits and debts.
- Learn how to form a Tennessee LLC so you can register your LLC online!
Demonstrate Steady Income
Your lender will need to see sufficient evidence that you have a steady source of income. Make sure you provide proper documentation to support this!
- Be prepared to provide your business and personal tax returns from the past two years.
- Business profit-and-loss statements and business bank statements can also help your case.
- Be sure to include any additional sources of income, including Social Security payments and rental income.
Consider Alternative Funding Options
If you can’t get approved for a standard mortgage, look for alternative mortgage programs such as low-documentation or no-documentation loans.
- Low-doc and no-doc home loans are easier to obtain but come with higher interest rates.
- Ask your parents if they would be willing to co-sign on your home loan.
- Search for a home in a more affordable area or save more money for a down payment so you can accept a smaller mortgage loan.
Don’t be discouraged if you’re looking for a mortgage as a self-employed person. If you just started freelancing, you may need to wait a year or so before applying for a mortgage so you can show that your business makes money consistently
Think You’re Ready to Talk to a Lender?
We can put you in touch with a great lender and help you begin your home search! Just give us a call: 615-208-3258.