5 Things to Consider If You Need a Self Employment Home Loan
If you are self-employed, you may have difficulty qualifying for a traditional mortgage. However, don’t be disheartened, there are many self-employment home loan options that can help you find the loan you need to buy the home you deserve.
There are many perks to being self-employed. You get to be your own boss, decide your own hours, create your own dress code, and in many cases, answer only to yourself. There are also a host of legitimate tax write offs that can make owning your own business more lucrative than punching a time clock. Everything from home office space to computers to office supplies and sometimes even meals are tax deductible. This can greatly lower your tax burden and help you keep more of your own hard earned money.
However, while many of these tax deductions can be huge benefits come tax time, they can also make it difficult to qualify for a home mortgage. For many business owners, there taxable income and what they actually make can be very different, with the amount that is taxable being relatively low. In some cases, business deductions may actually make it look like your business is in the red when in reality you are making a comfortable income. When you go to buy a home or investment property, this can become a big liability. Many traditional banks will look at your tax returns and give you a loan that is significantly smaller than what you need or can afford. Or, even worse, you may be denied a loan altogether based on your tax returns.
For many business owners, this can be a discouraging experience. You spent years of your life building your business and your personal brand, only to be told that it can actually be a liability. Do not lose hope. While many traditional banks may have their hands tied, there are several self employment home loan options and programs that can help you get the home loan you need.
If you find yourself in the situation of needing a non-conventional loan due to your self employment status, you need to get organized and find the right company to help you secure your loan. Here are five things to consider when you are in the market for a self employment home loan.
Find a mortgage broker and private lending company. Banks are hard to deal with. A mortgage broker will work for you to find the loan that you deserve. A mortgage broker can help you even when a bank has already said no because he has access to multiple lending institutions and loan types whereas a bank can only give out its own loans. A private lending company can also be useful because they can give private investments that banks are not able to offer.
Get your financial ducks in a row. Make sure you keep meticulous records and inventory to give a clear picture of what your cash flow looks like.
Consider separating your business and personal finances. This way even if your business is in the red due to expenses, your personal income is intact. Pay yourself like you would any other employee. This may mean that you end up paying more in social security taxes or personal income taxes, but may end up being worth it.
Look into alternative loan types. Hard money loans, adjustable rate mortgages, FHA loans, and private capital loans can all be good options for self employment home loans.
Be persistent. You may hear no a few times before you hear yes. Keep trying. The right loan is out there.
When you are ready to take the plunge and learn the benefits of a self employmenthome loan, call us at Level 4 Funding to get the process started.
Our knowledgeable and friendly staff can help you every step of the way. You will be glad you called. We look forward to the day the title company hands you your keys to your new home.
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23335 N 18th Drive Suite 120
Phoenix AZ 85027