The Struggle of Getting Approved for a Self-Employed Mortgage
The popularity of the internet hasn’t only helped to make our daily lives easier, but it has also revolutionized the business industry. More and more people are beginning to be self-employed, whether they’re opening their own online boutiques or writing marketing articles for small businesses. Unfortunately the idea of self-employment doesn’t sit well with mortgage lenders and there is a significant struggle with getting approved for a self-employed mortgage.
The Source of Your Income
The first thing that mortgage lenders take a look at when they determine if you’re eligible for a mortgage is whether you will have the ability to afford a mortgage in the future, even after interest rates may fluctuate. According to these financial institutions, being self-employed isn’t a reliable source of income and so you are at-risk for defaulting on your payments. Complex and variable sources of income are quite difficult for mortgage lenders to assess, which can lead to freelancers and contractors being denied.
Another large issue that comes into play when self-employed individuals try to get a mortgage is the stigma associated with being your own boss. Imagine all of the times that you have been told to go out and get a “real job” throughout your life as a contractor or a freelancer. This type of prejudice can negatively impact whether you are accepted for a mortgage or not. Even though some banks rely on the data to make their financial decisions, it is also difficult to get a mortgage as a self-employed individual due to the beliefs and opinions of the lender. This is why it is always advised that you try to find a lender that specializes in self-employment mortgages.
Finding the Right Lenders
Even though getting a mortgage through a typical financial institution may be difficult, it is not impossible. In fact, with more people becoming self-employed there are more lenders available that work with people who have variable sources of income. When you begin searching for your own home, make sure that you find a lender that specializes in self-employed mortgages. In most cases they will be smaller lenders that have manual underwriting. This means that a representative makes their lending decisions instead of a program on a computer. Since it is easier for another person to interpret the success of your self-employment instead of a computer, you will be more likely to be approved for a mortgage.