Welcome to Consulting Resource Guide
Self Employment Article
This is a selection made from among articles on Self Employment. For a permanent link to this article, or to bookmark it for future reading, click here.
Self Employed Mortgage Loan – Getting a Mortgage When You’re Self Employed
from: Carrie ReederBeing self employed has many benefits. When you are self-employed, you can write off all of your deductions on your taxes. You have the potential to make more income than someone who is employed by someone else. You have the freedom to be your own boss. One of the few times when being self employed has some drawbacks is when you go to get financing for a home or a major purchase. But, here are some things to know that can help you make the mortgage loan process run smoothly when you are self employed.
When verifying income - In general, lenders want to see at least 2 years of self employment history, sometimes they want to see 3 years. They will want to see this history verified in tax returns, usually. Sometimes the lenders will figure your income as being the average income you claimed on your income taxes as profit, not your gross business income. Sometimes the lender will figure your income as the lowest of the two years and sometimes as the highest of the two years. Talk to your mortgage broker or lender and find out which way they verify. Sometimes lenders will figure a portion of your write-offs or deductions back into your income. There are ideas of other ways that a lender may be able to verify your income and if you are self employed it will help you to be able to show a more of your income.
A. Use bank statements as proof of income – Find a lender who will accept 1-2 years of bank statements as proof of income. It is becoming more common nowadays for lenders to verify your income this way. This way usually works better in proving income than going off of your tax returns, because you can usually prove a lot more cash flow than tax returns will show. On your tax returns you usually subtract each and every business expense before you claim any profit. When using bank statements, you are still proving income, this does not put as much emphasis on your credit score or down payment as the stated income or no doc loan will.
B. Do a stated income or no doc loan – These types of loans are done all of the time, where you need no proof of income, you only state on a form what your income is, and you do not need to verify it. This can help if you are self employed and want to state your income as it is and not worry about having the lender average out your income from the last two years instead. Make sure you are accurate in stating your income, because the lender may be able to obtain past taxes from the IRS to confirm it. When you do a stated income loan, this will put more emphasis on your down payment or credit score. So, you will usually need one of these factors to be strong if you want to go this route. Most of the time when you do a stated income or no doc loan, you will be charged a slightly higher interest rate because of the extra risk the lenders carries.
C. Put together a profit & loss statement stating accurately stating your profits and expenses from the last two years. This can be a time consuming project, but it can sometimes be used as income verification for a lender. It is more usable if you have had it signed or verified by your accountant.
There are many ways that lenders can work with you if you are self employed. There are many programs available to help you and if you have a down payment or decent credit, you are almost guaranteed to be able to get approved somewhere. To see our list of recommended lenders that would be able to help you, visit here: Recommended
Mortgage Loan Companies Online or here Recommended Bad Credit
Mortgage Loan Companies Online
About the Author
Written by Carrie Reeder, Owner of ABC Loan Guide. Carrie's website is an informational mortgage loan website. Her website has articles and a list of recommended mortgage lenders for many different types of mortgage loans.
Related Articles for Self Employment
Self Employment News
Boomers Move To Self-Employment - Forbes
Boomers Move To Self-Employment Forbes The migration of older workers to self-employment helps explain a seeming anomaly in the job numbers. Even as their unemployment rate grows, so too does the ... |
Be your own boss, save on taxes - Prague Post
 Prague Post | Be your own boss, save on taxes Prague Post After being banned for much of the 20th century, self-employment became legal in 1990 and has since skyrocketed, reaching an all-time high in the first ... |
More jobs for Filipinos from self-employment, MSMEs - Philippine Information Agency
More jobs for Filipinos from self-employment, MSMEs Philippine Information Agency According to the 2009 Labor Force Survey, 12.1 million Filipinos are either employers or self-employed workers. This development augurs well for the thrust ... |
Fifteen Things to Do to Make Jumping Into Freelancing/Self ... - The Epoch Times
Fifteen Things to Do to Make Jumping Into Freelancing/Self ... The Epoch Times One of the biggest challenges of freelancing/self-employment is the uneven pay. Gone are the steady paychecks of a typical job. Gone is the idea that you'll ... |
NREGS benefited 4.5 cr households in 2008-09 - Economic Times
NREGS benefited 4.5 cr households in 2008-09 Economic Times Under the Swarnjayanti Gram Swarozgar Yojana, a self-employment programme for the rural poor, about 34 lakh self-help groups had been formed up to March ... |
Reality: 1 In 5 Are Jobless/Underemployed; Everyone's Affected - Daily Kos
Reality: 1 In 5 Are Jobless/Underemployed; Everyone's Affected Daily Kos The federal government's fiscal stimulus includes $5 billion for states where more families receive welfare or spending increases on employment subsidies or ... |