Financial Planning
泭
The key to financial planning is to泭start.
Whether youre looking to create your first financial plan or want a second opinion on one you already have, its free to talk.
Our new Q&A gives tips to an anxious homebuyer
Because money doesnt come with instructions.簧
Article published: June 05, 2024
Self-employed & ready to buy? We can help.
Navigating mortgages as a business owner is tough but not impossible. Lets discuss strategies to secure your dream home.
This Q&A is based on questions we receive from clients, just like you. Have a question that involves a dollar sign? Share it! Our planners and subject matter experts will help answer them in upcoming issues of Inside Personal Finance. Send us your questions here.
泭
Q:
Im self-employed and getting a mortgage close to my retirement has become a challenge. If your year-over-year income decreases by a certain percentage, Im told it can be hard to get a loan. I have more than $1.6 million in assets, and I am having to scramble to buy a house because Im slowing down my business, and next year my income could be 20% less. What should I do?
泭
A:
Lets face it, it can be easier to get a mortgage when you have an earned income than when you dont. If clients are considering buying a home, we ask them to think about doing it before they retire for this reason.
That said, those who are self-employed may have a harder time getting loans, including mortgages, if their incomes are inconsistent. But thats not to say you cant get a mortgage merely because youre self-employed. You simply need to meet the tests of lenders, which may include income stability. Bear in mind that even if your income is unstable, it doesnt mean you cant get a mortgage.
Your $1.6 million gives you an advantage. If that money is in investments (not real estate or other illiquid assets such as jewelry, artwork or collectibles), your financial planner should be able to provide the lender with a letter stating that your portfolio is capable of producing x amount of monthly or annual income. Many lenders accept such letters; some want to see two or three months of statements showing that youve actually generated such income. You didnt mention other income sources, such as Social Security, which could increase your borrowing capacity even more. And you didnt mention debts, such as existing car loans, which would decrease the amount you could borrow to buy a home.
泭
We hope you found this information helpful
Remember that any financial guidance must be adapted to your unique circumstances. For full guidance, always contact your financial planner.
泭
AM3515619
Need more help?
Set up a free meeting and get guidance tailored to your unique circumstances.
泭
