Those who are self-employed should consider themselves lucky in many ways. This tough economy has not been nice to corporations, let alone small businesses, so those who are fortunate to still turn a profit are doing very well overall. However, the self-employed do face additional challenges that most employees do not.
Tax concerns, medical insurance difficulties and trouble securing private loans are all common issues that the self-employed face. One issue that has recently gained more attention is the stubborn mortgage lending practices applied to the self-employed, causing many to be left out of the market or with fewer loan modification options when trouble strikes.
Tough Day At The Lending Office
Purchasing a home, refinancing a mortgage or securing a foreclosure alternative plan are difficult for most consumers these days. However, the self-employed are really feeling the pressure when it comes to securing a suitable mortgage agreement. Why?
Banks have bumped up their qualification requirements and are requiring more documentation from applicants. Since the self-employed tend to hold more variable revenue streams and financial histories, lenders tend to view them as more a risky borrower than a traditionally employed consumer. Whereas most banks require proof of income for the last year in most applicants, the self-employed may be required to provide two or more years of income history in order to secure the same loan.