Self employed? Tips on getting your mortgage approved
Today's Mortgage TIPP # 1:
Self employed clients that :
- cannot prove income though their Notice of Assessments( show very little income compared with the gross income they make)
-have been in business for more than 3 years
You MUST have:
- income taxes paid in full
- Financial Statements prepared by a certified accountant
-NOT SHOW A LOSS (DEFICIT) ON THE FINANCIAL STATEMENTS FOR THE LAST 2 YEARS.
If you show a loss, the reinsurers and lenders are going to decline their approval!!!
Once a decline is issued by the reinsurer, you have to wait until next year to buy a property, until the Financial Statements are going to be prepared again.
TIPP 2 !!!
Commissioned sales: YOU MUST ALWAYS PROVE THE INCOME
TIPP 3 !!!
Self employed clients that cannot prove income cannot be PREAPPROVED!
A pre-approval is JUST A RATE HOLD, an piece of paper issued electronically by the computer!
A pre-approval can be issued only for salaried clients and self-employed clients who show enough income on their Line 150 to sustain the mortgage!
Lenders do not hold rates for these type of clients.
A pre-approval does not guarantee you a FINAL APPROVAL. Your file still have to go through underwriting process ( lender and re-insurer) and your documents still need to be verified by the bank.
TO AVOID THE SITUATIONS LISTED ABOVE, YOU MUST HAVE A DOWN PAYMENT OF 20-25% OR MORE, AND USE A LENDER THAT HAS HIGHER INTEREST RATES AND FEES.
Please make sure you contact your mortgage broker months ahead of the purchase process, to avoid your mortgage decline