Do you think homeownership is out of reach because you are only working as a freelancer or contract worker? Your Home Design Center wants you to think again! If qualifying for a home loan is what has you worried about, you should know that being approved for financing on your first home doesn’t have to be painful. The process doesn’t even have to be stressful as long as you have a few essentials in your toolbox, including the following.
First Steps: Get Approved for a Loan as a Freelancer
This is actually less stressful than you think! Just follow these steps:
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First, you’ll need the right financing. Many contract workers worry they won’t be eligible for traditional home loans, but this simply isn’t the case! You’ll be held to the same standards in terms of your credit score, down payment, and interest rates.
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The tricky part is providing proof of income. You may need to take a few extra steps in order to clear this mortgage hurdle, but accurate financial records can certainly help.
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One way to ensure your records are precise is to set up an LLC. That way, your business payments will be separated from personal finances, and you’ll be eligible for tax savings. The best place to register LLC papers is online since filling out online forms can be done in minutes, and you don’t have to pay budget-busting attorney fees.
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As an LLC, you should be able to reduce your tax burden as a freelancer. Then you can put those tax savings towards the down payment for your new home. Many first-time buyers aim to put down at least 20% of the home’s value. If your freelancing income is a bit low, a down payment can also increase loan approval odds.
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In addition to setting up an LLC, getting serious about your budget can also help you save up. This will also help you prepare for paying a new mortgage each month.
Next Steps: Hire a Realtor and Find a Home
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Clueless about where to start with buying your first home? Hire a seasoned local realtor. You’ll have someone to guide you through each step.
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If you don’t have time to get out and look at houses in person, current market trends due to the pandemic may be in your favor. Ask your realtor about virtual tools, like 3D walkthroughs and Zoom showings, to see potential houses without leaving your home.
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Another current trend? Real estate markets everywhere are still on fire. Most are tilted in favor of sellers, so you need to act quickly when you find a perfect home!
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Work with your realtor to come up with a strong first offer but also be willing to move onto the next listing if you lose out. This is one more reason why freelancers should line up their financing before they begin searching for their dream home.
Working as a freelancer comes with so many wonderful perks, including being able to achieve your dream of homeownership. Just know that you may need more detailed financial paperwork, and you’ll need the help of an experienced realtor. From there, the rest can be really simple!
