Buying a Home While Self Employed
This year my husband and I decided to purchase another investment property. If you have been reading my blog, you know we have purchased 8 properties over the last 14 years. In most of those cases the mortgage has gone into my husband's name simply because I was either still in college, didn't have a solid two year work history, or due to the fact I am self employed and it is easier to obtain a loan when you are working for someone other than yourself. Now we are in the process of purchasing another rental property and decided it was time to spread the risk and put it in my name.
How Do You Buy a Home When Self Employed?
We knew going into this more documentation would be required by a mortgage lender, we just didn't realize how much more would be requested. It has been a frustrating yet educational experience. As a Richmond VA Realtor, I help buyers everyday achieve their goals and I rarely get into the mortgage aspects as that is beyond my scope. Buyers come to me already pre-approved or I put them in contact with one of my preferred lenders to iron out their loan details.
So what documents will you likely be asked for if you are self employed and want to purchase a home? Here are a few that have been requested of me:
* 2012-2013 W2's and tax returns
* Copy of drivers license
* Bank/financial statements showing the down payment funds and reserves
* Mortgage statements and copy of the note for primary residence and first investment property, to prove I am not on the loans
* Verification of employment. Since I am self employed with my business in an SCorp classification, my accountant will be the point of contact
That was easy, right? Well, yes, however that is just the beginning. Once the file was handed to a processor this additional documentation was requested:
* 60 day history of investment accounts
* A profit & loss statement for my business showing income and a break down of expenses
* A breakdown of earnings year to date
* Complete 2 year work history. (I had changed brokerages so I had to provide the name, contact info, and dates employed as an independent contractor for all places I worked)
* Letter of explanation detailing my varying income. (When you work for yourself, your income often varies!)
* Updated transaction history of my business account, including showing the EMD (Earnest Money Deposit) check has cleared
Quite the list!
While this may seem daunting, it really wasn't that difficult. It was just an inconvenience. It is a good thing we have great record keeping and knew exactly where to find these requested documents. And, the other items merely required me to stop at the bank or call my previous brokerage to ask for some information. The KEY is to obtain this information for the lender as quickly as possible so they can get the file back into underwriting and clear you to close!
For additional information on obtaining a loan while self employed, check out this article MSN.
Richmond VA Real Estate Agent
Originally published at: http://www.rvahometeam.com/richmondvanews/buying-home-while-self-employed/