How soon can we get a mortgage when self-employed?
by Mortgage Rates on Saturday, October 9th, 2010 | 4 Comments
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I personally really don’t see any way around this. They are wanting these records with the fact that they want to see if there is a risk or not, and how “established” the company is that he has built up, and what sort of productivity that it will have.
I know that it seems a little harsh, but the banks need some sort of “security or knowing” that they are going to get all of their money. Unless your boyfriend can pay up front the “entire” amount of the money immediately, they are going to need a paper trail to make sure that “all” of the payments will be there for on time.
I hope that this helps explain this situation to you, feel free to contact me if you need more information, or if you would like me to explain it in a bit of a different way.
STOP!!! Do not purchase a house with someone that you are not married to. I repeat do not purchase a hosue with someone you are not married to. It does not always end well, I know I know but you guys are different. That is exactly what everyone says. Do everyone a favor and wait the two years and hopefully you will be married and then you can live happily ever after.
Buying a home with a boyfriend is not a good idea. Unlike buying with a spouse, you do not have the same legal rights, nor do you have access to the court system to work out a fair solution if you split up. If you are willing to take on a 15 or 30 year mortgage, then marriage should be on the agenda first. Otherwise, you definitely need a contract that sets out what becomes of the equity in the home, and who will reside in the home if you split.
Self employed people definitely should bank locally so they have a good relationship with their banker, who has a stake in the well being of the community. If he has a written Contract to provide work for his former employer with a set minimum income for a year, and can put 30% down payment on a reasonably priced home, a community bank may be able to walk an application through the process.
Continue to rent and build more savings while establishing a strong history with the company as a contractor, and building a relationship with a local bank. Buying a home is a huge long-term commitment so setting out a written timetable on how to get to the point where you can buy a home together is going to be in your best interest.
Instead of being infuriated, consider that these roadblocks may be blessings in disguise. It gives you both time to know more about what it takes to be self employed, and develop a plan for your future.
Its not going to happen. His PAST employment is irrelevant since it has no bearing on his current ability to make money. This is an industry standard bench-mark since the failure rate for self-employed individuals is so high for the first two years. The risk is just not worth it for the bank. I have no doubt that your husband might be very successful AND be better off now, but you have to put yourself into their shoes. With over a 80% failure rate for self employed individuals for their first 2 years, would YOU lend a few hundred thousand bucks to someone knowing that there was less than a 20% chance that you would be paid back in full and on-time?