Self Employed Mortgage: For the Differently Employed

2007-03-08 10:33:40

( Insurance )



EARNING BUT NOT REGULARLY EMPLOYED

If you have your own small business or in a work-at-home arrangement and you want to buy your own property, a self employed mortgage is your best bet. While a self employed mortgage can be more complicated to avail of, banks and lenders do provide self employed mortgages specifically for this market.

A self employed mortgage is a loan program that is tailor-made for those who have alternate sources of regular income apart from being regularly employed in a company. This includes those who work as free-lancers or earn on a per project basis, those who operate a small home business, or those who are under a work-at-home arrangement.

Because of the nature of these types of sources of income, proper and formal financial documentation can be difficult to obtain. Moreover, there is no way to verify your proof of income which can be easily done if you are regularly employed.

DIFFERENT REQUIREMENTS

For regular mortgage plans, this can be an obstacle because proof of income is a prerequisite to mortgage processing and subsequent approval. If your financial documents satisfy the lender, then you get your loan. Lenders recognize this problem and that is why they have created self employed mortgage programs that have different sets of requirement for processing and approval.

Generally, self employed mortgages do not require a statement of income and has a relatively faster approval time. The downside however is that it has higher a down payment requirement and has higher interest rates. To put it simply, getting a self employed mortgage would require higher cash out on your part for the down payment, and you would be shouldering higher payments as well. This is how lenders minimize their risk when they issue self employed mortgages.

If you have a self employed mortgage, you may want to avail of a mortgage insurance to minimize the risks you have to take. Mortgage insurance provides a way for you to pay for your debts should you encounter financial difficulties.


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