Home Loans For Self-Employed In 2014 – LoanLove.com Takes A Look At Some New Challenges

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A new article from LoanLove.com reviews some of the new rules that will affect self-employed home loan borrowers this year.

LoanLove.com is a borrower advice website that provides detailed insights into the mortgage industry in a fun and entertaining way. The team at LoanLove.com is devoted to help empower both first time and experienced homeowners with valuable resources, first-class knowledge and connections to top-rated industry professionals and has the mission of helping consumers and borrowers to obtain the latest information on mortgage lending trends, the real estate market and the U.S. financial landscape in order to help them obtain a home loan that they will love. Loan Love continues to provide their viewers with all that they will need to get the best loan with their new article that looks at the challenges of getting home loans for the self-employed in 2014.

The article explains that obtaining a home loan has always been a challenge for those who own their own businesses, mainly because a steady income is very difficult to prove under the circumstances. However, this year has even more challenges in store for self-employed individuals as the new QM rules (Qualified Mortgage) make the requirements for getting home loans approved even more stringent. The new Loan Love article, titled “Are Mortgages For Individuals Self-Employed In 2014 Going to Be Inflated?”, explains,

“Stipulations found under the new QM rules apply to lenders expecting to sell mortgages on the secondary mortgage market to Fannie Mae or Freddie Mac, which applies to the majority of lenders. Lenders must be able to verify several financial criteria designed to determine if a borrower will be able to repay the loan. The rules go so far as to allow consumers to sue lenders who fail to properly verify the prospective borrower’s financial information, so there is great incentive for lenders to adhere to the guidelines. One of the critical steps involved is for the prospective borrower to provide a list of assets, a recent credit report, credit scores and evidence of other debts.”

Even prior to 2014 self-employed borrowers were already heavily scrutinized. They will now likely find it even more difficult to obtain a mortgage because they must prove their income based on multiple years of tax returns and profit-and-loss statements, rather than the standard pay stubs and W2s that regular employees have at their disposal. Unfortunately this paints a pretty gloomy picture for most business owners who are planning to purchase a house. LoanLove.com ends by saying,

“Unless the prospective borrower can demonstrate stable or, better yet, increasing income, his or her chances of obtaining a mortgage under the new rules now in effect could be slim. Under the new QM rules, it’s questionable how much leeway lenders might feel they have, or how willing they might be to use it, to make decisions regarding mortgage loans for self-employed individuals. Unfortunately, the current economic and political environment would suggest lenders are not likely to go too far out of their way to qualify borrowers who have anything but a pristine financial history and easily verifiable income. Most lenders will not be willing to risk running afoul of secondary mortgage market guidelines.”

For more information on the current state of affairs for self employed borrowers, and advice on finding a loan, please click here.

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Kevin Blue
Loan Love
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