Getting a mortgage for your new home is easier if you have a steady job with a steady paycheck. However, many individuals run businesses and work as freelancers. The self-employed can still get a mortgage, but they need to know how. Here are a few tips to help secure a mortgage if you work as a freelancer or you're self-employed.
Start Saving your Down Payment Now
A larger than normal down payment always helps tip the scales in your favor. When you're self-employed it helps if you can put down 20% or more. This will make it easier to get approved for a mortgage even with the higher risk class of being self-employed.
Fix any Credit Problems Now
If you have bad credit or less than great credit, you want to work on fixing it now. This is very important because a low credit score, along with a self-employed income makes it difficult to qualify for a mortgage. You can secure a mortgage, but it will be much easier with a credit score of 700+.
The easiest way to boost your credit score is to pay your bills on time and pay down your debt levels. Avoid making any big purchases and don't apply for new credit before you apply for your mortgage.
Show Plenty of Assets
Another way to tip the scales in your favor when applying for a mortgage is with plenty of assets. A self-employed or freelance worker can show they have property that is paid off, retirement accounts, savings and other assets to help qualify for a better interest rate and a better overall mortgage. The more assets you have, the better your chances, especially if your credit isn't great or you don't have a huge down payment.
If you're self-employed or a freelance worker, you automatically become a higher risk for mortgage companies. However, it's not impossible to get a mortgage or to get a good mortgage for that matter. Use these tips and you will be well on your way to getting the home of your dreams.