You’ve been working as an independent contractor for years, and now, you want to buy your own home. However, if you’re a freelancer, how can you prove that you can make your mortgage payments? If you prepare accordingly, the process is relatively simple. To help you along the way, Ideal Lending has gathered resources for contractors who are ready to become homeowners.
Unique Concerns for Contractors
When you work for yourself, you’ll have to fulfill some special requirements to qualify for a mortgage. Here are a few things every contractor will need to be aware of.
- Your lender will want to see that you’ll have consistent future income. Aim to set up retainer agreements with clients for proof.
- To demonstrate to your lender that your business is growing and your income is increasing, follow these tips to raise your rates.
- You will need to show your invoices and receipts to your lender, so sticking with an organized accounting system is essential..
Personal Finance Guidance
Before submitting your mortgage application, ensure your financial portfolio is in great shape!
- Having a low credit score can hinder your application. So, take steps to boost your score before you start house hunting!
- Increase your savings rate to build up your down payment fund — paying down 20 percent will allow you to avoid paying private mortgage insurance.
- Say goodbye to your debt for good by focusing on paying it off prior to putting in a mortgage application!
- Make a point to set up an LLC to ensure you’re keeping your personal assets separate from your business assets. A formation like ZenBusiness can make this an easy process.
Navigate the Buying Process
These tips will guide you through everything from choosing a supportive real estate agent to figuring out which type of mortgage is right for you.
- Look into each stage of the home buying process from start to finish so that you’ll know exactly what to expect. Consulting with a qualified mortgage lender like Ideal Lending can be a great help in this regard.
- Understand the different types of mortgages so that you can figure out which loan best suits your situation.
- Find a lender who understands your needs as a contractor and will answer all of your application questions.
If you’re a contractor hoping to buy your first home, you might be worried about your chances of getting approved for a mortgage. You may have to put a little extra effort into the process, but today, plenty of freelancers and contractors successfully purchase their own homes. With these tips, you’ll be approved before you know it!
Buying a new home or refinancing your current loan? Our experienced team of loan originators are dedicated to making that a reality. At Ideal Lending, you will work one-on-one with a dedicated mortgage loan officer who can explain loan programs and offer great mortgage rates to meet your financial goals. Contact us today!