Purchasing While Self-Employed

It is an important time of year for any self-employed individuals that plan on purchasing a home in the future. Unfortunately they don’t plan for these future purchases.

When I have an opportunity to interact with these future home buyers and review their existing tax returns, I can quickly let them know if we are going to have a problem. Often they don’t understand their own tax returns. Many bring in large sums of money, but by the time they are done with expenses, the net numbers look very different.

Being as this time of year is important,I often coach my clients they need to make sure they have discussed their plans with their accountants, as everyone needs to be on the same page, so that the tax returns show enough revenues to qualify for a future mortgage.

There are currently a couple of mortgage products available that may also assist self-employed borrowers. These loans will go by the cash flow going through the checking account(s). The minimum credit scores need to be in the high 600’s and normally are offered as adjustable rates that are fixed for 5-7 years. Interest rates on these loans are about 6% these days.

The preference for these self-employed borrowers is always to get them rates in the 3’s and 4% area, but it isn’t always possible.

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