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I talk a lot about gathering information because I believe it’s the best start anyone can get when looking for a mortgage or refinance. If you’re self-employed, this is even more important and potentially harder. There is certainly more documentation and income history required, but that’s not the only difference. Let’s look over a few tips for all self-employed individuals looking at refinancing:

1. If your business hasn’t been around for a couple years, it may be hard to get a refinance. Lenders today want to see a history of income for at least that long. If your business has been around for many years, make sure your documentation is in good order.
2. Cash helps if you are self-employed. A good way to improve your standing with the lender is by having substantial cash reserves.
3. Less write-offs for the self-employed means more gross income on your tax return. It also means paying more in taxes. A big stat for lenders is the gross income so increasing that number will help you in a refinance. Just be willing to take the hit come tax time.

There are many extra things to consider when you are looking at a mortgage or refinance and are self-employed. If you are thinking of changing jobs, this could also have severe consequences to your refinancing abilities. Our resident Mortgage Professor, Jack Guttentag, can show you why.

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