When it comes to applying for a home mortgage, self-employed individuals can easily find themselves caught in the same trap: they provide a lender with all the necessary documents, only to have their loan application rejected. Sometimes, they can even be strung along for months only to be declined. One can understand why it is easy to be discouraged, and not seek the help they need.
With almost 20 years of experience in the mortgage industry, loan broker Mike Pacheco has the inside knowledge to help self-employed people overcome the barriers that can make it harder for them to obtain a mortgage and fulfill their homeownership dreams. That’s the primary goal of his company, Qualified Home Loans: making the mortgage process simple for anyone who has been turned away for a conventional loan. Pacheco launched his business ten years ago to demystify the lending process. By following his 3 simple rules self-employed borrowers can understand how lenders see them and regain control of their ability to borrow.
1. Find a good broker
While many borrowers feel more comfortable going to the bank they work with frequently with their checking/savings accounts, self-employed clients are limiting their options to the most rigid of all lenders. A broker will work with multiple lenders, and an effective broker will know which lenders are the best to work with for your specific situation. This added value may also be delivered without additional cost to the client as lenders will pay brokers to help bring them business.
This is where experience becomes a critical attribute of an effective broker because the ability to find the ideal mortgage match for your circumstances depends on it. Banks decline self-employed clients because they have a set number of mortgages. If somebody is not a good fit for any of the bank’s options, they are turned away because accommodation for the client’s individual needs is unfeasible for the bank. However, it is an entirely different approach and outcome with an effective broker because it is no longer about whether you can get approved but rather the best way to get you approved.
Consider Mike Pacheco as an example. He’s often able to turn those rejections into a “yes” by relying on his network of more than 35 trustworthy lenders, developed over his many years working in the mortgage industry, to craft a mortgage plan tailored to each client’s individual needs.
“We are committed to our clients from the first day we meet until they get the keys to their home,” he says, “But we devote a lot of energy at the beginning to make mortgages simple and uneventful. There shouldn’t be any confusion or mystery about the process of getting approved and funded, and no surprises.”
2. Be aware of alternative programs
Over the last several years a non-bank loan marketplace has emerged allowing clients access to loans that have previously been locked out. Compared to conventional loans, these loans offer alternative ways to qualify, but also carry higher rates and fees. For those without the ability to show income on tax returns, these programs offer critical access to credit.
3. Start Planning Sooner
Many people considering buying a home wait until they feel they are ready to start doing the work to become pre-approved. Mike’s advice: “If you wait until you feel like you are ready you are starting behind.” This is particularly true of the self-employed. Getting information and clear advice is critical. “You should start exploring your options around 6 months to a year before you think you will be buying.” This means doing things like providing documentation, running credit, and having consultation calls.
He notes that self-employed people who apply for mortgages are often given little information other than being made to wait weeks before being rejected for insufficient income. “But those lenders never say what the income should be, and they don’t explain how to get qualified for a loan. We do the opposite and offer all the solutions.”
“Information and guidance is the core of what we offer.” Qualified Home Loans uses comprehensive planning to identify any potential negative issues with a client’s mortgage application and then offers strategies to resolve those problems while making every step easy to understand.
It’s an approach to lending that has helped his California-based business see consistent growth year after year. Pacheco’s ever-expanding client base includes:
- Self-employed people
- Aspiring homeowners interested in purchase loans
- People who have several income sources
- Anyone who has been told “no” by a lender
For more information, don’t hesitate to reach out to Mike Pacheco’s team.