Even More, Common Mortgage Questions Answered
In our third instalment of common mortgage questions, let’s go over things that can affect your mortgage approval, along with qualifying for a mortgage when you run your own business or have a contract position.
What are some things that can affect my mortgage approval?
While a mortgage approval is a big step in the right direction, it’s not a full guarantee of mortgage financing. If anything were to change with your financial situation, it could impact your mortgage approval.
For example, if you were to quit your job and start a new career in the middle of the mortgage approval, that would affect it. The lender would want to know the details of your new job and whether there’s a probationary period.
Taking on new debt before your home closes is another potential issue. If you were to take on new debt, such as a car loan or car lease, it could push the debt ratios lenders to qualify you based on out of whack. It could also cause your credit score to decrease, which means you may no longer qualify for the mortgage.
It’s important to speak with a mortgage professional before making any changes to your finances; otherwise, it could negatively impact your mortgage approval and even put it in jeopardy.
Can I get a mortgage if I’m self-employed?
Yes, you can. There’s a misconception out there that you can’t get a mortgage if you’re self-employed. That’s not the case. The lender needs to see more paperwork, but you can still get a mortgage when you run your own business.
Typically mortgage lenders need you to show at least two years of filed tax returns in order to get mortgage financing when you run your own business. The reason for this is that lenders see running your own business as riskier than being an employee of a company. As such, the lender needs to see more of a track record.
You can still get mortgage financing if you have been in business for less than two years. You might need to go with an alternative lender, which has more flexible qualification criteria.
What about if I’m on contract?
Yes, similar to being self-employed, you may still be able to get mortgage financing when you’re working on contract.
The lender’s main concern is how long the contract is for and the likelihood of renewal. For example, if you have a contract position that lasts for a year, you have a lot better chance of a mortgage approval than a someone who’s contract comes up for renewal in a couple of months and doesn’t know if it will be renewed.
The Bottom Line
Do you have more mortgage questions that remain unanswered? Speak with your mortgage experts today to get to the bottom of your unanswered questions.