As soon as I realized that my personal financial picture was a little bleak, I started thinking about taking out a personal loan. I wasn't really looking forward to going into debt, but I knew that if I wanted to solve a few short-term problems, a loan would be the way to go. I talked with a few of my local financial institutions to get a good idea of what they could offer me, and then I sat down to go over the paperwork. It was incredible to see how much money I could save by securing a lower interest rate. Check out my blog for more information about loans.
While many people work for companies and businesses, others work for themselves. Working for yourself offers perks and benefits, but it can also present challenges when trying to get a mortgage loan. So can you get a mortgage if you're self-employed? The answer is yes, but it might take some extra work. Here are some details to review before applying for a self-employed home loan.
Types of self-employment
Self-employed individuals can do many things. For example, freelance writers are independent contractors for companies that need content. A plumber might start their own business offering plumbing services. Other self-employed businesses can include graphic design, handyman services, and house cleaning businesses. When you're self-employed, you earn money. But you don't generally receive it through routine paychecks.
The challenges of getting a loan
Mortgage lenders review several things before approving loans. One of the primary things is income. People use their income to pay their bills, including their mortgages. Unfortunately, lenders typically ask for pay stubs to prove income. Self-employed people might not have these, though. You'll face challenges proving your income if you don't have pay stubs. The best thing to do is to find a lender specializing in self-employed loans. There are lenders around that offer this service, and you should look for one.
How to prove your income
You might not have pay stubs to prove your self-employed income. However, you can prove it in other ways. First, do you have 1099s from businesses you work for? If so, these prove that you earn money. You can also prove your income by offering your tax returns and bank statements. Additionally, a credit check can prove that you pay your bills. If you have a high credit score, the lender can tell that you pay your bills. If you pay your bills on time and your credit proves it, the lender will know that you must have enough income.
Another option is to start paying yourself through paychecks. You can then use the pay stubs to prove your income. However, you might have to wait a few months before applying for a loan. If you wait six months, you'll have six months of pay stubs to show the lender when asking for a mortgage loan.
Contact a lender
Now that you understand how to prove your income when self-employed, you can look for a lender. Once you find one, apply for the loan and prove your income through these methods.
For more information, contact a local company, like NewFi Lending.
Share8 May 2023
