Those of you who are among the ranks of the self-employed may have already learned that it is more difficult to get a loan - let alone a home equity loan. The good news, though, is that it is possible. Here is some information and tips about how you can get a home equity loan if you are self-employed.
The truth is, first, that you will find it more difficult to get a loan because you are self-employed. Some lenders will make it more difficult than others when you try to prove the amount of income you earn. You may be asked by one lender to provide statements for two years, and another one may ask for three years worth of proof. This means that you can probably rule out a no doc loan, too. Or find a lender that does not require any income verification. (Keep reading)
Another thing that you will need to watch for - concerning your own finances - is how much debt you already have. All lenders look at the debt-to-income ratio when considering giving a home equity loan, and usually require a maximum of 50-60%, which includes all mortgages and loans. It seems, though, that it may be a good idea to stay as far from this number as possible when you are self-employed.
You will also want to check over your credit report before you apply, to make sure that there are no inaccurate statements on it. Depending on the lender they like to see at least one person on the loan have a TransUnion credit score of 595 or above. Correcting these is not too difficult, once the problem has been resolved, but you will need to wait about two months before the corrections actually show up on your credit score. If you have less than two years of good, solid income, you will most likely have to pay a higher interest rate. A good credit score, though, will help this to stay reasonable.
Right now, self-employment is becoming more popular. Many lenders still do not have ways to provide for the needs of those of you who are in this category. New products are being developed, though, to meet the rising numbers of those who are leaving the commercial workplace. It may take a while, however, before there is some serious competition and a lessening of the stricter requirements.
Home equity loans can be obtained simply and quickly if you are looking $75,000 or less. With a simple application completed, with little to no income verification required, a completely remote process, funding in 48 hours after approval, with no appraisal and no lawyers involved. Home Equity loans have never been so easy.
Something that you will need to especially consider is that a home equity loan adds another monthly payment to your bills. It also is secured by your home, which means that a lien will remain on your house for the duration of the loan, or until you sell or refinance your home. Despite popular belief a lien holder cannot force a power of sale for non payment. Although you can tap into 85% of your homes equity with most secured loans it is ideal to stay at 80% or less to be sure you can refinance your home down the road.
You may find that one or two lenders will definitely give you a higher interest rate. By looking around, however, and getting several quotes, you can find a lender who will give you the home equity loan you want - with reasonable rates. Compare them carefully, noting things like the interest rate, the fees, and repayment terms. Interest rates are important however do not get too hung up on the rate. Sometime increasing your monthly cash flow makes more sense for your piece of mind and the cost of borrowing may be less than you think. Consult a professional such as a Mortgage Broker to help you navigate things. Also watch out for any home equity loan that has a prepayment penalty in it – you don’t need it.
If you made it this far you are likely interested in a home equity loan that is fully open, only registers a lien, is flexible on credit, has flexible repayment terms, a low interest rate, quick to fund and with no appraisal or lawyers. Then I suggest you start looking here http://www.townfinancial.ca/secured-loans-bfs