Are you looking for tips to apply for mortgage without a fulltime job? You don’t have a permanent job, but you want to apply for and get a mortgage, possible?
Gig economy workers in the USA are growing in number. These workers are not required to submit W-2s in order to document their incomes.
However, they also do not have income predictions as those with full time and permanent jobs do, a reason it might be harder for them to apply for a mortgage.
If you’re one of those working for gigs, not having a permanent income, you should prepare well in advance and get your finances ready.
Tips to Apply for Mortgage without a Fulltime Job
If you’re a freelancer working on many part time jobs and you tend to hop from one contract to another, your financial package might not be one that mortgage lenders would like.
The experts revealed that the mortgage industry is looking for things like two years of work employment, credit score and a residency. However, those in the gig economy might not fit any of those parameters.
Are you a good risk?
This cannot be stressed more. Mortgage lenders need assurance that you’re worth the risk because you’re a gig economy worker. They want to make sure that you are qualified and you can pay the loan off.
That is why you should lower your debt or pay it off before applying for a home mortgage. You should also see to it that your credit score is in good standing.
Don’t deduct a long list of expenses from your income
When filing taxes, self-employed people are using Schedule C to file taxes and report their income. They also tend to list a long list of expenses they pay to work on their jobs.
However, doing the same technique will just reduce your profits on record. These expenses include cellular phone bills, internet bills, professional memberships and business meals. When that happens, your net income for the loan might not be enough.
That is why you must be careful when deducting expenses because it is the net income used by the lender when qualifying borrowers for a loan, not the gross income.
Overall, don’t try to list down all the expenses to the point that you won’t qualify for the loan because your net income is not enough for it.
So to increase your net income, try forging some of those deductions you’re listing within the past two-year period if you’re planning to apply for a home mortgage in the near future.
Prepare and get your documents ready
Working in the gig economy, you should be preparing several things like your credit score, proofs of income, previous employment records, references list, previous landlords and employers, and so on.
In short, prepare your records, including important dates and locations where you worked and people you worked for in the past. While it sounds time-consuming and stressful to prepare all these things, it is the only way to go.
Gig economy workers need this information more than those with a permanent job do. Reason is that you need to convince a lender that you’re worth being approved for a home loan.
Convince, convince and convince the lender
Explain what you do for a living and educate him about your gig or job. If he cannot understand what you do, try printing out an article online about it.
Take some time to educate and convince the lender that your previous two years were good. You should also be able to show him that the coming years will be normal and there will be continuance of the job.
In short, be able to supply him the documentation for those things. You might also help yourself if you would print some articles regarding your industry. By doing so, you will make him feel more comfortable, but it is not a guarantee you’re going to be approved.
Take note: A mortgage lender is looking for someone with a stable history. While gigs start and stop, you can have a better advantage if you’re using the same skill set or if working within the same industry. For this reason, show you have the consistency when it comes to the work you’re doing.
Talk about your goals
Go and talk to a mortgage lender about your home buying goals. For example, talk to him about how much income you will need based on the home amount you’re looking to buy.
So aside from trying to convince a lender that you should be approved, you should also try to be educated about how much income you need to show the lender.
By doing so, you can identify how much mortgage you like, how much income you need to qualify for it and how much will be the monthly payment just in case.
Remember these tips to apply for mortgage without a fulltime job when applying for a home loan. Again, talk to the lender about your goals and your job, get your papers and records ready and do not deduct a long list of expenses from your income, to name some.