Qualifying for a mortgage has been challenging for people who are self-employed for decades. You know the drill: You do the right thing and put your extra profits back into your business. You buy more product or you spend a little extra on advertising. You are thinking of your future instead of indulging. That’s good business. That’s being financially smart. Homebuyers who are self-employed have had to spend two years just spending their own money instead of putting it into the business simply to purchase a home. It has never made any sense, but those were the rules.
Thankfully, lenders have stopped saying, “I totally understand but…” and have decided to change the rules instead. See, a few years ago, when banks started taking a hard look at what they can do to solve this problem, nearly 15 million Americans were self-employed. That figure keeps growing. The internet and social media marketing have allowed those who are self-employed to really grow. This growing population of self-employed business owners equated to fewer people able to qualify for a home loan, simply because they were making sound financial choices. They were doing without the extras in their personal life (avoiding paying themselves more simply) to plan for the future of their business. Just before these bank statement loans started booming, nearly 10 percent of the workforce was self-employed!
Those homebuyers would have to prove their income using their tax returns. Yet, a smart business owner would have plenty of money coming into the business account and pay themselves less. Investing profits back into the business instead of on a new boat or a new wardrobe or a new home theater meant that the homebuyers net income would be minimal. Meanwhile, lenders wanted to see that people not only had enough money to pay their mortgage, but they wanted to see some money left over too. The lenders and the homebuyers knew what was happening, but there was nothing that could be done, until the banks changed the rules.
Bank Statement Loans
Recently, mortgage companies began offering a new type of loan that is essentially tailored to reflect the self-employed homebuyer’s actual ability to pay their mortgage. These bank statement loans don’t decide how much the homebuyer can afford based on tax returns, they base it on deposits made into the homebuyers bank accounts. That way, if the self-employed business owner chose to be smart with their cash and put it back into the business instead of going on vacation, they wouldn’t be penalized anymore!
So, if you are self-employed and you thought you’d have to choose between smart business practices and financially wise choices or a new home, you should know that things are different now. Call your mortgage broker or bank. Call your credit union or another lender. Ask them about a bank statement loan. Then, call us and we will get you into a Vero Beach home that you can actually afford, not just one that your tax returns say you can afford! You don’t have to choose between investing in your business for two years or buying a new home any longer!
We Are Your Indian River County Experts
Please consider our team at Alex MacWilliam Real Estate whether you’re selling your home or looking for a new one. We love helping make people’s dreams come true. Plus, we’re experts in this area. Want to find a place to golf in Vero Beach? Just ask one of our skilled realtors while touring your potential new house! Our realtors will try to answer any questions you might have about amenities you can find nearby. Also, check out our Vero Beach relocation guide.
Feel free to use our online search tool to find Vero Beach real estate from your device now. Plus, while you’re at it, also check out:
- Open houses in Vero Beach
- Featured Vero Beach real estate
- 55+ condo communities in Vero Beach
- Single family homes in Vero Beach with acreage
So, if you are considering relocating to Vero Beach, please contact us today. Our real estate team is extremely knowledgeable about the area and can find the perfect home for you. Call us at 772-231-6509 to talk to a Realtor® in Vero Beach, FL today. We can search the MLS and find your dream home.