When you’re freelancing or otherwise employing yourself, getting loans for big things (like mortgages) can be daunting.
That’s because most of the time when you’re getting financing, you have to prove to creditors that your income is steady and reliable -- which, particularly if you’re just getting started in self-employment, it might not be at all.
When you’re self-employed, your income is probably going to be coming to you from lots of different sources.
Keeping critical papers from these sources in a single location is one of the most important things you can do in order to save yourself time later on.
If you haven’t done this yet, there’s no sense in worrying about it -- just keep this in mind for the future.
For now, go and collect all of the forms that a potential lender might need to look at in order to determine if you’d make a good borrower. That includes anything pertaining to your financial history, including any debts or assets you might have.
Having a high credit score can be important to creditors, so keeping yours healthy is an important aspect of financial planning for just about anyone (not just those who work from home). Keeping your debt low is helpful with this; of course, that’s not always an option for everyone.
So when you can’t keep your debt low, keep your credit high by repaying that debt consistently and on time. If you can, try to refinance existing debt that you have trouble keeping up with in order to get to a monthly payment you can really afford.
You’re going to have difficulty getting financing for anything if you have a lot of outstanding debt, but doing so isn’t impossible.
Different lenders have different rules and expectations for doling out financing to self-employed workers.
Most require people to have two years of verifiable self-employed income in order to be considered for something like a mortgage. Other lenders will consider those who can show as little as a single year of income.
When it comes to getting financing from a particular lender, it’s crucial to know about that particular lender’s expectations ahead of time -- and if you know for a fact you won’t meet those expectations, you should start looking for a lender that might be more amenable to your situation.