Are you planning to buy a home in Albuquerque and work for yourself? These days, it's more common and popular in Albuquerque to be a freelancer, contract worker, gig worker, or anyone self-employed. The downside is that there are no benefits such as health insurance. The same time, there are more upsides for professionals who can work remotely.

One of the advantages is the freedom and flexibility you have to create your own schedule and earn unlimited income. You can also create your own lifestyle by balancing work and personal time.

Freelancers and contractors may encounter a problem, however.

Is it possible to get a mortgage?

It can be difficult to prove your income if you do not have a traditional employer when you apply for a mortgage. Lenders will also scrutinize your application more closely.

Keep Up with Relevant Documents

It's easy to lose track of your earnings and expenditures over time, but when it comes time to apply for a mortgage, being disorganized can become a problem. You can expect to have ups and downs in your income when you're a freelancer or self-employed. A lender wants to see your long-term earnings average. If you can show your lender at least several years' worth of earnings documentation, you should be able to calm their fears.

A pattern of earnings needs to be demonstrated. You might have to delay buying a home until you can do that. The best way to show steady earnings is to show trends that are on the rise.

Furthermore, if you are self-employed, you likely try to write off as much of your business expenses as you can. Obviously, you want to show as high an income as possible, so if you are planning to buy a house in the near future, consider your deductions accordingly.

Rather than W2s, you will need to show your 1099s from the past two years. In addition to your tax returns, you may need to provide bank statements and profit and loss statements. Additionally, you can provide letters from clients proving your relationship is stable.

Income Calculation

The way you calculate your income as a freelancer is different. By dividing the past two years of your adjusted gross income by 24, your lender will arrive at your average monthly income.

Make the most of your savings

In order to avoid paying private mortgage insurance, you should aim to save at least 20% of the home's purchase price. With that in mind, it's best to make a large downpayment in order to demonstrate your reliability as a borrower.

Organize Your Finances

If you're self-employed, you can expect to face more hurdles when buying a home. You will most certainly be held to a higher standard financially, so be prepared.

Ideally, you need a credit score of at least 740. The higher the score, the better.

Put a plan in place to pay off your debt, including your credit cards. A lender's willingness to lend to you is heavily influenced by your credit utilization. It is ideal to use less than 30 percent of your credit limit.

Check your credit report before applying for a home loan. By doing this, you can see where you need to improve and where possible errors may be occurring. It is not uncommon to find errors in credit reports.

Before you apply for a home loan, refrain from opening new accounts or lines of credit, because that will negatively impact your credit score.

Finally, separate your personal and business bank accounts before applying for a mortgage. Your business should not use a personal bank account.

Getting a mortgage as a freelancer is definitely possible, but also more challenging. Prepare yourself for it as much as possible, and you will be more successful in the long run.

HOT PROPERTY OF THE WEEK!

8116 CORN MOUNTAIN Place NW, Albuquerque, NM 87114

Popular floor plan 4BDR/3BA/3CG plus office/study on the main level plus a large loft! Light, bright & open floor plan with lots of living space featuring an oversized family room with stacked stone fireplace, wall of windows & soaring ceilings, separate living room, formal dining room w/new flooring! Entertainer's kitchen features beautiful cabinetry, solid surface countertops, recessed lighting, island/bar tile flooring, pantry & sunny bkfst nook! Private master suite features huge walk-in closet, dual sink vanity, garden tub & sep shower! Covered patio, shrubs, trees, rock landscape. In the heart of Ventana Ranch West close to schools, parks, pathways, shopping!!

Learn More!

Contact us today to help you buy or sell your next home in Albuquerque. Looking for the perfect home for sale in Albuquerque? Our easy-to-use home search tool can help you start the process. Join us twice a week on our blog for more real estate advice and great reasons to buy a home in Albuquerque and the surrounding area. Follow us on Facebook for the latest Albuquerque real estate updates.

Get your Morning Inspiration with the Sandi Pressley Team