Published by REALTOR.com | November 2, 2020
While freelancing undoubtedly has its perks, helping you get a mortgage is not one of them.
The gig economy has blown up in the past few years, with more and more people choosing to work as freelancers, either by starting their own businesses, or by picking up non-salaried jobs from bigger companies.
According to the Freelancers Union, over 50 million Americans worked last year as freelancers, a number that represents roughly 35% of the country’s workforce.
While freelancing undoubtedly has its perks, helping you get a mortgage is not one of them.
Since COVID-19 started tearing through the country in March 2020, we’ve heard reports of freelancers having an even harder time getting approved for mortgages. Here’s the latest on what to expect when applying for a mortgage as a freelancer in the post-coronavirus era.
What’s New?
The main thing that’s changed for freelancers applying for a mortgage is that the need for documentation has increased—by a lot.
Because of the economic turmoil caused by the pandemic, lenders are being extra careful when it comes to determining who actually qualifies for these mortgages, and whether they can realistically repay them.
“In the past, we could simply use the prior year’s tax returns,” says Todd Wells of Sinberg Capital Lending.
“There’s more documentation required post-COVID for self-employed borrowers. Now, we need a year-to-date profit and loss statement, as well as business bank statements to support the profit and loss statement.”
In other words, lenders need a lot more proof that you’re in a good position to take on that mortgage, and providing that proof could be a major pain, to say the least.
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