Page 30 - AreaNewsletters "April 2020" issue

F I NA NCE & B US I NE S S
Side Hustle Home:
Provided by: Ti any Brown Motto Mortgage
How to Apply for a Mortgage in the Gig Economy
Self-employment doesn’t have to disqualify you from homeownership
The growing gig economy
accommodates freelanc-
ers, independent contrac-
tors and short-term rental
hosts, to name a few. This
self-employment movement
includes many would-be home buyers - sacri cing 9-5 stability shouldn’t equate to sacri cing your dream home. If you’re applying for a mortgage in the gig economy, be sure to:
Check your credit score
A stand-out credit score will quell some of the un- easiness lenders may feel. Request a copy of your credit report from TransUnion, Equifax and Experian. Comb through each report and work to resolve any errors long before it’s time to make an o er. Getting a mortgage despite bad credit is possible, but the credit score improvement process can be time-consuming and complicated.
Save for a sizable down payment
Whether contracting, delivering food or taking on temp work, concentrate on saving. You don’t need 20% down to buy a house, but the more you pay up front, the less you’ll likely pay over time.
Know your debt-to-income ratio (DTI)
Your DTI compares how much you owe each month to how much you earn. Speci cally, it’s the percent- age of your gross monthly income (before taxes) that goes towards payments for rent, student loans, credit cards, or other debt. Higher percentages mean riskier investments for lenders, so paying down debts or supplementing income makes you a safer bet.
April 2020 • Castle Rock “AreaNewsletters”
Share at least two years of tax returns
Borrowers with 1099s mayfacemorescrutiny than their W-2-wield- ingcounterparts.While
a typical borrower may simply need their tax return and a pay stub, your income is more complicated. Providing tax returns from multiple years veri es both income amount and consistency.
Be mindful of deductions
Mortgage professionals also use your tax documents to determine how much of your income may be loan quali cation eligible. To be considered during a loan quali cation review, income reported on your mortgage application must also be listed in your tax returns. Multiple deductions mean lower taxes, but may reduce your ability to qualify for a loan.
Explore other options
If you don’t qualify for a conventional loan, explore government-backed FHA, VA or USDA loans. All may be viable options for gig-working borrowers with varied nancials.
Applying for a mortgage in the gig economy
The freedom to set your own hours, choose your own clients and work on your terms may not disqualify you from homeownership. With a bit of extra preparation and documentation, you’re on your way to owning that home you’ve been dreaming of.
For more information about mortgages, contact Tiffany Brown, Broker/Owner, Motto Mortgage, Castle Rock. 727-204-8852.
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