Self-employment options provide people the opportunity to build a business and make as much money as they want. While typically tricky at first, talented individuals dedicated to their career path can find unexpected levels of success. At a certain point, some self-employed hustlers are ready to look into buying a house.
If you are self-employed and interested in buying your first home in Riverside County or Orange County, California, you need to know what to expect. Being self-employed creates certain hurdles when purchasing your first property. This Team Sosi mortgage guide will tell you the basics about buying a home when self-employed.
Keep Good Financial Records
You need to prove your income for an extended period. Keep good records to show the bank. Without appropriate proof of income, the bank will not approve a loan. You also need to show that you have a good debt to income ratio, so minimize financial obligations.
To make things easy for yourself, talk to the bank about two years in advance to learn what they will want when you are ready.
Monitor Credit Score
Credit tells a bank how likely you are to pay back a loan. They take this very seriously, especially when it comes to large home loans.
Keep an eye on your credit score by using one of the numerous free services available. Also, make a point to pay all credit cards on time and pay off any items you have in collections.
Save for an Adequate Down Payment
The more you have for a down payment, the better. Most mortgage lenders suggest 20%. While that may seem like a lot, it shows the lender you have money in the bank. You also won’t need to get additional insurance on your mortgage loan.
Pick Your House Wisely
Buying a house gets exciting. However, don’t get so excited you buy a house out of your means. You may have done well recently, but you may run into a dry spell at work. Stay modest and save instead of going all out on your first house. You will prevent yourself from embarrassing financial problems down the road.
Our mortgage brokers at Team Sosi work with self-employed homeowners regularly. They can answer all additional questions you have and help you make the move from renter to homeowner.