Being self-employed has its perks. You’re your own boss and you have the freedom to work the way you choose. However, it does present some unique challenges, like the process for applying for a mortgage, which tends to be more challenging for self-employed individuals. Read on as AOG Wealth Management, estate planning and asset management professionals, shares tips on applying for a mortgage while self-employed:
Prepare Your Paperwork Thoroughly: The lender will request detailed documentation to determine your overall financial picture. For the self-employed, they will typically ask for two years of financial history. This includes a list of your assets, a list of your debts and your federal tax returns. If you own a business, you might also need to provide a profit and loss statement or a 1099 form.
Don’t Mix Personal Finances With Business: This can complicate how a potential lender will view your liabilities. As a local financial planning firm, we also recommend checking your credit score. A bad credit score can decrease your chances of getting a good rate on a mortgage. The rate you will get is usually based on the amount you are putting down, your credit score and your debt-to-income ratio.
Pay Attention to Your Deductions: Mortgage lenders consider your total income to be the amount after deductions, not what you gross before those adjustments. The expenses that you write off for business that can benefit you when it’s tax time may not be in your favor when you apply for a mortgage. Fortunately, getting approved for your mortgage depends on stable and predictable income. If you can prove that you have steady taxable income, then you shouldn’t have a problem.
We can assist you with our tax planning and other financial services. AOG Wealth Management has over a decade of experience. Our exceptional intellectual capital allows us to create personalized and strategic investments for our clients. We serve many areas, including Washington, DC, and McLean, VA. Call us at (866) 993-0203 to learn more about getting a mortgage.