Removing Road Blocks to Home Ownership – Self-Employment

Filed under: Mortgage News

Today’s video is the start of a series of related topics that I am going to share about some of the major road blocks to home ownership. Some of these things are real, and some of them are myths that are assumed by people. I hear people tell me that they just can’t buy because of some vague reason, and I want to break down these myths in the industry.

Self-Employment Myths and Facts

There are a few situations with self-employment that we see:

  • Minimal History: If you haven’t been self-employed for very long, then it’s true that you will have a hard time getting a mortgage. You need a few years of history to show a track record with your income.
  • Taxes: One of the great things about being self-employed is minimizing tax liability through deductions and tax strategy. It’s a good idea to minimize the tax burden. But the problem is that if you are aggressive with this tax strategy, then it seems hard to get the financing that is needed. But there are really great alternative documentation programs now that we can talk about: bank statement programs or profit and loss programs.

Homeownership done right is one of the most important financial tools you can invest in going into your retirement. Keep in mind that some of these options for self-employed home buyers will come with a slightly higher interest rate so there is a cost for it. But after running the numbers, we’ve found that the increased payment due to the slightly higher interest rate is actually cheaper than paying the higher tax liability for adjusting your tax strategy to show higher income on paper.

Working with the right accountant and mortgage lender can give you great ways to get a house while being self-employed. Don’t let the myths stay in the way! It may take a little planning, but there are options available. If you are sitting on the sidelines because of self-employment, I would love to talk with you and show you real numbers for the lending options that are available.

Too many people delaying homeownership because they don’t think that they will qualify for the lending. If you have questions, feel free to contact Bill Provost at Franklin Loan Center. (760) 282-4415