Pre-Qualification Is Just The First Step In Getting A 1099 Home Loan
Working as an independent contractor can be very rewarding and you may also be bringing in an impressive income. But if you are self-employed, you might find it difficult to obtain a mortgage even if you can easily afford the mortgage payments. However, given the rise in the number of independent contractors, some banks are choosing to offer loans tailored to meet the needs of self-employed workers. The easiest way to get started is with a prequalification.
The Pre-Qualification Process
When you contact a bank that offers a 1099 loan, they will ask you to complete a questionnaire. You will provide details that will help the bank determine if you will qualify for a 1099 loan. You will fill out your 1099 income, debt, and assets. You will not be approved for a loan at this stage, but you will have a better sense of whether you will be qualified for a loan.
Verifying Your Income
When you are a W2 employee, you will use your paycheck stubs or direct deposit information to verify your income. But if you are self-employed, you will use other forms of documentation to prove that you were compensated for your work. One of the most important is your tax returns.
The tax returns are an objective way to verify your income for an entire year. This is because your tax returns show the income that you were required to report by law. However, depending on where your self-employment income comes from, you might also need to verify your income with other evidence of payment such as bank statements and checks you have received.
Proving That Your Business is Profitable
If you own a business, the lender will want to know the state of the business to determine if you are able to afford your credit. To evaluate your business, they'll ask for financial statements from your business. You may need to have all of this information looked over by an accountant.
Your Bank Statement
To be able to pay for the mortgage, you must be able to make a down payment. If you show your bank account statement, you will be able to prove that you have the funds to make a down payment. You'll also be able to verify your income. Being approved for a loan is more difficult than becoming pre-qualified, but once the process is completed, the bank will pay for your new home.
Contact a 1099 income mortgage lender like NewFi Lending to learn more.