The Rules for Self-Employed Mortgage Borrowers

A couple looking to buy a new houseIn the country, there are around 14 million self-employed mortgage borrowers. Gone are the days that involved difficult processes for a mortgage company in Hendersonville.

Home loan approval is getting easier. Just ask Mortgage Investors Group. When you’re refinancing or purchasing a house, you would have to undergo an array of particular steps.

The first thing that you have to do is to apply for the loan, either online, by phone or personally. Most of the time, the processor or loan officer gets your details verbally and sends it to the AUS or an automated underwriting system.

You commonly don’t have to accomplish plenty of documents yourself. You will need to provide documented copies of your investments, savings or income balances, debts, and income. They will also ask you to provide your employment information and evaluate your credit.

Self-Employed Borrowers

The underwriting system will produce an answer in minutes, depending on your details. It will either refer your loan for individual underwriting, decline, or approve you. Afterward, the underwriter will take over.

If you get the approval of the AUS, the underwriter examines your documents to guarantee that it matches the details on your application. In case the system is unable to decide or declines the loan, the underwriter will also double check to determine if you qualify under standard guidelines.

Income Problem

Usually, self-employed applicants have difficulty because their actual income is USD 6,000 per month, but with tax, it only sums to USD 4,000 per month. Underwriters utilize some difficult form to create a “qualifying” income for borrowers that are self-employed.

They begin with their taxable income and include some deductions, such as depreciation. This is because they don’t consider it as a real expense that comes out of their bank accounts.

However, they could deduct “windfall” or “extraordinary” income. If any source of income doesn’t look like it’s continuous or stable, you can’t utilize it to be eligible for a home loan.