How do I buy a house if I am Self-Employed?
There are a few steps you need to take when looking to buy a home when you are self-employed. Although there are extra steps, compared to someone who is on a payroll, this does not mean that it is impossible! Listed below are five steps on how to buy a house if you are self-employed.
1. Use a Mortgage Calculator
When looking, you need to understand your budget. Ask yourself questions like:
- What Can I Afford Each Month?
- What is the Highest Value of a Home I Can Afford?
- What Do I Have For Settlement Costs?
After you have the answers, use an online mortgage calculator. They are free and easy to use. They can give you an idea of how much a borrower may lend you and at what rate based on your self-employment income.
2. Gather all the Paperwork
Before you can put an offer on a home or contact an individual to help you with the process, make sure that you have all the paperwork you need to prove that you have the funds to buy a home and pay the monthly payments. This can be anything from tax returns to invoices and bank statements. The banks just want to make sure that they are lending money to someone who can keep up with payments.
3. Look at Homes
The third step is the most fun part! During this step, contact home sellers and realtors near areas you want to live. Make a budget and stick to it! This can be hard, but it is necessary. Sometimes, before looking at homes, you may need to get a preapproval letter. This depends, however, on the realtor and seller.
When you choose a lender or a bank, you need to apply for a mortgage. The first step is pre-approval, where you get a letter that states the bank can give you a specific amount to cover the funds of a home.
A lot of houses will not let you see the inside without this letter since they want serious buyers!
5. Make an Offer
After looking at homes and having a preapproval, you can make a decision and place an offer on houses you are interested in. It is best to only put an offer on one house at a time. Since the market is competitive, always keep options open.
Although there are more steps to buying a house when you are self-employed, it is virtually the same process! The most important thing is that you have paperwork that tells your lender companies.