Self Employed Home Loan

A self employed home loan can be a tricky thing to acquire if the borrower has not been self employed for less than 2 years. Most banks and credit unions want to see two income tax returns for applicants who work for themselves as proof of income before granting a contract. Even then, many banks are unwilling to offer a deal because of the greater risk associated with self employed persons whose job security is less and whose incomes can vary widely from month to month. Qualifying for a contract to buy a house is difficult for many buyers, but these problems are exacerbated for self-employed buyers. But those who are self employed and want to buy a house can find several options to investigate.

If a prospective buyer has worked for himself for less than two years, one type of self employed home loan option this person can consider is a no-doc contract, which is one where the buyer does not have to supply the lender with any documentation of income or assets. The disadvantage of these contracts is the higher interest rate they carry, typically 2 to 3 percentage points above a conventional loan. Still, many buyers use this option, knowing that after they have 2 years of tax returns as a self-employed person, they can refinance their contract at a lower, conventional rate.

Perhaps the easier option for self employed home loans is to buy a house from a seller offering owner financing. Owner financing offers easier qualification requirements, less paperwork, and a faster closing. The disadvantage is that the purchaser will be working with an individual instead of a lending institution and will most likely have to hire a real estate attorney to handle the transaction. A prospective buyer can identify owners that offer financing by looking for phrases such as motivated seller and all offers considered in MLS.

Another good option is to look for properties advertising assumable transactions. They enable the borrower to take over the payments on the existing contract on the property. FHA assumable loans enable the borrower to simply take over the payments without having to qualify. They are attractive self employed home loans because they often offer the low, conventional interest rates without all the hassles of approval.

The lease option is another self employed home loan option. This contract allows the renter to build equity in a rent-to-own scenario. After the renter has agreed on a purchase price with the seller, the renter moves into the house prior to transfer of the title and makes monthly rent payments to the owner. A portion of the monthly payment is set aside as the down payment. At the end of the lease, the renter can either walk away or apply the funds that have accrued to obtain a contract. This gives both a down payment and time to acquire the 2 years of tax returns needed for a conventional loan.

Finding good deals can seem like a daunting task; however, if a borrower carefully researches and investigates the options, obtaining a new house and financing for a self employed home loan will become a reality. As Christians, we have no excuse about being knowledgable regarding our financial outlook and decisions. First Samuel 2:3 says, "The Lord is a God of knowledge." We are to follow His example. A wise Christian shopper will do adequate research on all the options, enlist the help of a knowledgeable realtor, and educate himself about the different types of self employed home loans to achieve the dream of house ownership.

For more information: http://www.christianet.com/homeloans