If you are someone that is self employed, then you may be asking yourself if you are eligible to take a home equity loan. Well if you came here looking for that answer, I am here to tell you that you can. These days banks and lenders are recognizing the growing of people that are self employed, and are willing to work with them in most cases to be able to get a home equity loan. The process will be a little bit different though as it is harder for someone that is self employed to show their proof of income.
Some of the requirements that a certain bank or mortgage lender may require is the amount of time that you have been self employed. Some may say a year or two, and some will want to see tax returns from previous years as a proof of income, in order to try and qualify you for a home equity loan for the self employed. The more you can prove to them that you make a steady income over a period of time the better off you will be on getting that loan.
Some banks and mortgage lenders will have their own specialist for people that want to take out either a 1st mortgage loan, or a 2nd mortgage. These specialist may not even ask for proof of income, and are very helpful towards the person that is self employed. Of course there are some restrictions. If you are trying to get a loan for your 1st mortgage, you may be required to put more of a down payment down than someone that has a full time job that gives you W-2’s and is easier to prove how much you make annually. Or if you are trying to take out a home equity loan, you may not be able to borrow the full 80-100% of the value that you have in your home.
Another tip for those self employed individuals that are seeking a home equity loan is to keep excellent documentation and records of your business. Think about it, the more you show the lender that you are squared away, and can make payments on time the less risk you will appear to the lender. With that being said, you will have to have good credit also, and you may not be able to get away with having a poor credit score and still getting the home equity loan unlike those who are not self employed.
Home equity loans for those that are self employed are very common. Just be careful about how much you are wanting to borrow and follow the same guidelines that have been outlined and discussed here over and over about home equity loans and you should have no problems.
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