Buying a house can be challenging, even for business owners like you. Many entrepreneurs find it hard to get approved for a mortgage. Unlike your traditionally employed counterparts, they can quickly provide two years worth of proof of income, making it easier for lenders to assess their eligibility for a mortgage.
But lucky for you, we’ve handpicked some of the best home-buying tips for business owners to help you increase your chances of getting Mortgage Loans Midland approval. Here’s how you can navigate the home loan application process like a pro.
Work On Improving Your Credit
Your credit history and score matters not only when seeking a business loan, but when applying for a mortgage as well. You need to meet the minimum credit score requirement. Boost your score by paying on time, keeping your credit balances low and paying off your debt. Check your credit report and address errors or discrepancies way before you apply for a home loan.
Verify Your Employment Status And Income
Those who have a 9-5 job can easily prove their employment history by providing your work details and then calling your employer for verification. But this becomes an impossible task when you are the boss yourself. What you need to do is to provide the necessary paperwork to verify employment proving you’re a self-employed individual for at least two years. If, however, you’re a start-up business owner with a company that is less than 2-years old, you’ll need to provide additional documentation to apply. As for income verification, your personal and business tax returns, as well as other income documentation, will do.
Isolate Your Personal From Business Assets
Most home loans require you to put down a minimum down payment to qualify. If you only have a single bank account for personal and business use, it can cause issues that can lead to a rejection of your home loan application. Make sure to separate your assets and have your down payment sitting on your personal savings account months before sending in your application.
Know The Exact Percentage Of Your Business Ownership
If you have business partners who have shares in your company, then determine how much stake you own. Most mortgage lenders will consider you as a self-employed if you own at least 25% voting stock in your business. Your business tax return can verify this during the mortgage process application.
Put Down A Higher Down Payment
Lenders nowadays are a lot more forgiving than they were in the past. For example, you have a poor credit score but wants to buy a house with mortgage financing. You can compensate your low credit score by investing a higher down payment. This way, you’ll get a better interest rate and a lower loan amount. You get to enjoy either a smaller monthly mortgage payment or a shorter mortgage term.
You may find buying a house a bit more of a challenge due to the fact that securing a mortgage can be tricky when you’re a business owner. Keep these tips in mind and communicate with a good mortgage lender and you’ll improve your chances of getting approved for a home loan.