Mortgage loans are available for people from different aspects of life. VA loans, FHA loans are some of the popular loans. Added to this category are the loans that are available for the self-employed people. Self-employed mortgage home loans have helped this group make their dream come true of owning a house. Earlier, there were No Doc or stated loans for this self-employed group. As of 2008, new rules have been implemented that has terminated the old rule of not needing supporting documents for income and assets.
For accessing this loan, one has to submit a series of documents and fill in forms. The borrower is expected to submit two years of business and personal tax returns. This should be accompanied by other forms related to the tax history. Then a separate form is needed to be filled in by the borrower. These forms are then checked by the underwriter.
Though self-employed borrowers have bigger credits than other income groups, granting of loans have been reduced and declined. Self-employers have two main problems in obtaining a mortgage loan.
Firstly, their accountants are experts in reducing the net income rate for tax charges. Unfortunately, underwriters verify net income rate information for granting loans.
Secondly, every mortgage lender sees to that the self-employed borrower is engaged in business for more than two years. They calculate these two years exactly as a complete 24 months.
Apart from these two disadvantages, lender's make a note of the percentage of the borrower's income. I.e. a borrower should own 25% of the business income. If not then he/she is considered to be an employer of the company, and not a self-employed.
But, these advantages can be turned off, if the borrower seeks a professional guidance. Underwriters will also be ready to sign the loan forms, if they can verify and qualify borrowers on the net income. Mortgage loans to the self-employed are in high demand, and there needs to be more flexible guidelines for them.