If you are self-employed, you might think a home loan is not an option. Moreover, you might wonder whether you could find a mortgage at all. Conventional loans impose stringent guidelines on the borrowers. Amidst all, work experience and its related documents leave an impact on the process. However, there are plenty of ways which ensure a mortgage program for a freelancer in Houston. If you can remember the essential suggestions, the process becomes easier than ever.
Finding a mortgage is quite crucial for any freelancer. A self-employed person does not always have proof of income or pay stubs with him. Lenders usually ask for the documents so that they can prove the borrower does not carry enough risk. It is true that the freelancers remain at risk for not having consistent work experience. Therefore, their credit score is often in decline. For this very reason, you need to prepare for the bank statement mortgage in the right way.
As the name suggests, bank statement home loans in Houston require evidence for your personal and business accounts. Lenders check whether you have made adequate deposits every month. Besides the bank statements, a lot of things go under consideration. So, let’s take a look below now.
Work on the FICO Scores
Stellar credit scores speak volumes. It shows how capable you are as a borrower. The three-digit number refers to your payment history and more. If you keep it in check, you can solve many problems at the earliest stage. There may be times when you might find errors in the credit report. These little issues can be the main reason behind low credit scores. Besides checking the report for errors, do not open a credit line. You can also try to keep the existing credit cards open. If you close them, it will irk the utilization rate.
Save for a Hassle-free Process
If you are a freelancer, make sure you have saved enough for a down payment and closing costs. Unlike government-backed loans, the bank statement home loans require a minimum of 10% down payment. It is always better to save when you are eyeing a mortgage. After all, lenders prefer borrowers with a reliable source. If your monthly income depends on an unstable source, lenders might consider you as a risk factor. Fluctuating earnings are common, and this might become an obstacle for a large down payment. When you have saved enough and are ready for a larger down payment, the monthly mortgage payments also go down.
At the time of the underwriting process, the lenders focus on several factors. Stable income, type of business, payment history, and property location – these are common. The eligibility guidelines vary from one lender to another. It is important for them to check whether you have the ability to generate enough income. There will be challenges, but you might ask for a lender’s help for the easiest way. Look around and check what’s in the store for you. Research for the bank statement home loan in Houston!
