Getting a Mortgage: A Downside of Self-Employment

There are a lot of benefits to self-employment.  You get to make your own hours, you’re your own boss, you can work in your underwear and watch as many ACC and NCAA Tournament games as you want during that time of year.

There are drawbacks too though.  You can’t slack off if you want to make money.  Until you’re big enough to hire people to do some of the more day-to-day tasks, there’s a lot to manage yourself.

I also just found out how hard it can be to get a mortgage.  See, when you’re self employed and paying your own taxes (another downside), you want to get as many deductions as you can, right?  Unfortunately, the advice for being self-employed and trying to get a mortgage is to declare less so your income will look bigger and you’ll qualify for more.

The problem is that since you don’t have a regular paycheck, lenders look at your last two tax returns.

Members only

This section of this post contains content that is only available to members. Log in or subscribe for access.

And this is THE time to buy a home.  A few months ago was more THE time and interest rates have begun creeping back up, as have home prices, but everything is still pretty low.  If I have to wait until next year to start looking at houses I’ll get a lot less house for the money.

In many cases the recommendation for self-employed people is to get a cosigner.  We actually had a cosigner lined up, but it didn’t work out for them to be able to do it because of some technicality or another.  I went outside my comfort zone and asked someone else about it, but they said no.  I didn’t expect a yes, but, as I’ve been fond of saying lately, I could really use a win.  So I was hoping…

If anyone knows anyone who wants to cosign for a nice place in Wilmington, send them my way.  Sooner than later please.

I could stay where I am.  As far as apartments go, it’s a nice one and I love the neighborhood it’s nestled away in.  Furthermore, it’s almost like a townhome and it’s an end unit, so there’s not a lot noise.  The space isn’t bad either.  But I really want an outside area of my own.  I want to be able to have pets without jumping up the rent a ridiculous amount.  Having pool access is nice, but having a washer and dryer in the place would be nice too.

And so I’m going to go rental house hunting.  I’m probably going to pay as much or more than I would for a place of my own in the process.  And then I’m going to get absolutely mauled on taxes next year so I can prove that I have enough of an income to afford a mortgage.