If you are ready to buy a home and are self-employed, you may find it more difficult than usual to obtain financing, due to insufficient income history, credit or savings. Below are some tips to help ensure your financial situation is as strong as it can be when you are ready to apply for a home loan.
Savings: Consider allocating a
percentage of income to your savings account instead of a fixed dollar amount.
This ensures adequate savings during high income months. This is in addition to
the funds you put aside for income taxes.
Credit score: Make sure you pay
your bills on time, all the time. Don’t use more than 40 percent of your total
outstanding credit lines, and pay more than the minimum every month (in full if
possible). Don’t apply for too much new credit at one time, but don’t close
your old, unused lines. Those actions actually hurt your score and may
negatively affect a loan application.
Financial history: Avoid applying
until your credit history is pristine. Plan for a substantial down payment (at
least 15 percent), as well as a vigorous financial screening process that
includes providing at least two years of income, savings and income tax history.
If you are self-employed, have
your financial house in order and are ready to buy, call me at 317.777.1805, or
email me at Scott@LacySells.com.
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