How to Get a Mortgage as an Entrepreneur Running an Expanding Home-Based Business
If you run a home-based business that's expanding and want to buy a home or refinance, it could be more difficult for you to secure financing. The reason? It can be more challenging to prove the amount of your income without a regular paycheck or W-2 - and that's why most lenders have more rigorous regulations for self-employed borrowers. However, successfully obtaining a loan is still possible.
Improve your Odds of Getting a Mortgage
The vast majority of lenders - like Rob Tennyson Mortgages - are more than happy to help you get a loan if you supply the right documentation to verify your income and do your best to improve your credit. You need to know what to expect and do this right from the beginning to get approved, so here are a few aspects to focus on.
Prepare a Your Credit
Before you apply, you need to improve your chances of getting a loan. Most lenders rely on your credit report to determine your ability to pay off a loan, and generally speaking, you need to have a FICO score of at least 620 to get approved. If you have issues like charge-offs, judgments, bankruptcies, maxed-out credit lines, and so on, these will appear as red flags to a lender, so eliminate them before you apply. Make payments on time, eliminate debt, correct any red flags or errors on your reports, and remain within the limits of your revolving accounts to boost your chances of approval.
Do Your Research
Research all the steps you need to take when it comes to buying a home. From applying for a loan to knowing how much house you can afford to get preapproved to connecting with the right real estate agent.
Before applying for a loan, you should know how much you can reasonably afford to spend on a home and the monthly payment you can provide. When you get pre-approved, it means that the lender has decided how much you can borrow, the programs you qualify for, and the interest rate you're likely to pay, making you a more attractive buyer. Also, the agent you work with will make a massive difference in the end result, so make sure you hire a great real estate agent who has your best interest in mind.
Gather the Necessary Documents
Although lenders need to follow the SBA mandates, they will always find a way to inspect your application thoroughly. To decrease the waiting period and boost your chances of getting a home loan, make sure you have all the necessary documents at hand. These should include your tax returns, bank statements, and other reports that show why you qualify for a loan.
Choose the Best Type of Loan
Now that you have all the documents ready, you can apply for a mortgage. But how do you choose the right loan? This will depend heavily on what you can afford, how it ties into your business, where you live, whether you’re a veterain; the list goes on. Your lender can guide you through your choices to find the right fit. Once you’ve applied, remember to be patient as you wait for the results, as it could take a few weeks before you get a response from the lender.
In a Nutshell
Applying for a mortgage while running your home-based business is a new venture. It can be challenging and confusing at first, but if you follow the tips mentioned above and do your pertinent research, you'll get that loan and keep expanding your home business to reach success.
Buying a home is one of the most important decisions you get to make, and working with an expert who has your best interest in mind is the next important step to take. Rob Tennyson provides his clients with the best options thanks to his deep knowledge of real estate and mortgage markets, so call (310) 702-5604 now to make an appointment!