Ready to buy Lakewood real estate? If you talk to any of the local real estate agents, one of the first steps they would recommend that you take is going to a lender and getting pre-approved for a mortgage. This usually means bringing in pay stubs, tax documentation, and proof of employment, but what do you do if you’re self-employed? Although you will be required to supply the same information to a lender if you’re self-employed, getting approved may be a bit more difficult.
Lenders will ask you to provide documentation of your income regardless of whether you’re self-employed or not. If you work for a company, all you have to do is bring in your W-2. If you’re self-employed, you will need to bring in your tax documents. But, this becomes tricky when you consider many self-employed professionals are told to write off as many business expenses as they can in order to reduce the amount they owe in taxes. This is a great way to cut back on tax expenses, but it hurts you when it’s time to show how much you make in order to get approved for a loan. Learn about the top tax write-offs for the self-employed
Depending on your income and the amount of time you’ve been self-employed, you may be viewed as a high risk to lenders. But, that doesn’t mean you’re out of luck when it comes to securing a mortgage. There are ways to make yourself seem more attractive to lenders, just follow these tips:
- Track every dollar that goes into your business and every dollar that goes out of your business. You will be required to provide a substantial amount of documentation during the mortgage application process, so you will need to have all of this information at your fingertips.
- Use software designed to help self-employed professionals and small business owners track their money. This type of software usually allows you to pull reports to make it easier to get the information the bank needs.
- Save as much money as possible so you can make a larger down payment on the home if you do get approved. This will show the bank you are not as much of a risk as they think you are, and that you’re smart enough with your money to have a decent amount of it available to spend on a new home.
- Show the bank you are a serious business owner by providing them proof your business is registered with the state. This will ease their concerns and prove you are a full-time, dedicated business owner.
- Don’t mix business with personal. Keep all of your finances separate, otherwise the bank will be very confused when you produce the paperwork, and the mix-up could delay the approval process.
Are you self-employed? Now that you know how to get approved for a mortgage, it’s time to find a real estate agent who understands your needs. Contact us
to talk to the experienced agents at Colorado Home Sales.