Being self-employed doesn’t mean you’re more likely to be struggling financially, but banks still tend to get nervous when self-employed people start asking about mortgages. Unfortunately, this means it is usually harder to get a mortgage and requires more paperwork. However, if you’re financially sound and willing to put in the work, one of the new homes in Portland Oregon can be yours.
Essentially, lenders view self-employed people as being financially unstable, even if this isn’t the case. They prefer people with a W-2 form and a consistent income. While you may have a solid, consistent income, lenders are going to want more proof. Plus, if you’re taking a lot of deductions for business expenses to benefit when it comes to taxes, it may work against you by lowering your income, which lenders won’t appreciate.
To get past the concerns of lenders there are certainly things you can do to make yourself more appealing. Improving your debt to income ratio is one step in the right direction.Try to reduce your debt and, certainly increase your income, if possible. Both are ideal, but reducing your debt does help. However, this may also mean you will probably need to stick to the lower end of the home prices you can afford when looking for a new home.
One way to reduce your debt is to pay off consumer debt. For the self-employed, the less debt you have, the better. Pay off your credit cards and if possible, pay off your car loan. This helps because it also increases your ready cash flow.
Similarly, you should have as much as possible in savings and accessible financial reserves. You’ll likely need to make a larger down payment. Showing that you have enough for a down payment, as well as reserves to handle the mortgage, property taxes, homeowner’s insurance, and maintenance is important if you want to get an affordable loan.
Ultimately, you’ll need to be able to show extensive paperwork and documentation. Have all of this ready before you start shopping for a new home. Most likely, you’ll need to show bank statements, balance sheets, profit and loss statements, and tax returns. There’s also the likelihood that a lender may want to see your debts, your business’s monthly payments, along with a list of all of your assets, including savings and investments. On top of all of that, you may need actual proof of your business or the fact that you are self-employed. This can include letters from your accountant, as well as clients.
While it all may seem excessively invasive, it will be worth it to have one of the new homes in Portland Oregon to call your very own. If you work from home, we have a number of home designs with plenty of flex rooms and sections of the home that can easily be turned into a full working office space. We even have home designs with the study/home office right in the front of the home with a small area just off the entrance that is perfect for visiting clients if you want to keep your work area separated from your private home. If you’re looking for a new home to meet your self-employed needs, contact us today.Tags: homebuilder in portland wa, new homes for sale portland wa, new homes portland or
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This post was written by Garrette Custom Homes