Tips for Financing a Home as a Small Business Owner
Most people really don’t grasp just what it takes for a modern-day business owner to get financing for their home. Unfortunately, mortgage process isn’t so friendly to entrepreneurs. The main reason for this is that, if you own a business, it is very hard to prove your income during the mortgage process. And this goes back to the start of the most recent recession.
We are all familiar with the grand mortgage meltdown that disrupted the whole industry a few years ago. In the past, all you needed to do is submit minimal paperwork to prove that your business generates revenue and that the income in your statement is actually yours. Simple, right? Well, as lending institutions have become more thorough, the process has become much more difficult – especially for the business owner.
But this doesn’t mean that you are locked out from the home financing option. You only need to get your documents in order and have a great plan tool. From the onset, buying a home has always been a daunting process. However, these tips will help get you started on financing your new home:
- Bigger is Better
The truth is that a bigger deposit will work in your favor. It gives the lender confidence in your financial stability. It’s no secret that working with lenders to get a mortgage is usually frustrating and stressful, to say the least. However, with institutions such as Altrua Financial in the market, getting your mortgage can be a walk in the park. They offer great discounts that ensure you are only working within your budget as they are optimized for the small business owner. While it might be better to start with a large down payment, Altrua will advise you on how you can make whatever amount you have count.
- Know your Numbers
If you are running a business, you know that there are times when your income will fluctuate. This is unlike conventional employees who have a fixed income. Your lender will need to ascertain how much you earn and if you will be able to service that loan. They will also look at your saving habits that include deposits and withdrawals from your savings account. So make sure to use updated records that will show your business’ milestones since its inception.
- Separate your Assets
One of the steps in applying for a mortgage includes showing your proof of assets. Typically, the lending company will need you to make a down payment from your personal funds. This can be a big problem for small business owners who tend to co-mingle their business and personal assets. To avoid this, the source of your down payment and settlement fees needs to be separate from the your business assets.
- Proving Income
Any lending institution will need proof of income before approving your mortgage. They will take a look at your bookkeeping and tax documentation. Also, you will need to supply up to two years of your business tax return. So it’s a good idea to stay in good standing with the IRS. You will also need to submit your personal tax returns upon request. Finally, ensure that your credit score is looking good. This will help to show that you follow through with paying your loans and that your financial situation is stable.