The norm used to include holding a job for 40 years until retirement. Furthermore, it was customary going to work at the same local plant, factory, or bank, but today employment often looks different. Work from home jobs are abundant for various reasons, and employees usually prefer the flexibility offered.
Working from home can sometimes cause mortgage qualification issues. Maybe it is relocating from one state to another, unreimbursed employee expenses resulting from work from home jobs, or being self-employed. Guess what. OVM financial has solutions for these buyers.
Popular work from home jobs
- Freelance – consultant, blogger, editor
- Sales – both inside and outside sales
- Tech jobs – help desk, web design, software developer
- Marketing – graphic artist
- Engineer, architect
These are just a few popular career paths that may result in working outside the office. As you will see, this mindset certainly has advantages and we will discuss opportunities when it comes to buying a home.
Relocation purchase for work from home jobs
Working outside the office may mean working across the country from the closest branch. Mortgage lenders care about the proximity borrowers live from their job. In the case where a buyer works from home in virginia and relocates to north carolina, lenders are paying attention.
Let’s say the buyer’s employer is in virginia, and there is no office located within “reasonable commuting distance” from the new home. At first glance, this could be an issue, and some lenders would have a problem with it. Military veterans have an unbelievable solution available when buying a long way from work. Check it out!
Hypothetically, since the buyer has a history of working from home and would continue to do the same, this is customary for the buyer. There is a good chance of requiring a signed letter from the employer stating the buyer will continue to work from home. Therefore, chances of approval are high in this buyer situation.
Self-employed relocation challenges
The last example is generally not too complicated, but self-employed contractors or business owners have more significant challenges when it comes to getting a relocation mortgage. For instance, a small business owner relocating to a new location may be an issue. Here’s a scenario. A widget selling business is located in south carolina and sells primarily to the local market. The owner wants to move to chesapeake, virginia and open a new business location. The problem is there is no history of the owner operating the SC business from another state. Plus, there is no history for the new business. On self-employed relocation purchases like this, it is often a problem.
What if the company sells widgets online all over the world? Now, we are talking about a situation that makes more sense for lenders. Especially when management is already in place to run the business.
There are other cases where a self-employed buyer may relocate and qualify well for a mortgage. Sometimes a business owner may buy a second home in the new market while retaining the current resident. Living in two homes makes sense in this case. Remember to talk up-front to an experienced loan officer in any case!
Freelance work popularity & home buying opportunities grow
Every year freelance work from home jobs increase in popularity among U.S. Workers. Choosing flexibility over benefits, home versus office, working for several companies instead of one, and comfort over corporate are common reasons. This is especially true with the millennial generation. Whether it is out of necessity or preference, this form of self-employment is here to stay. So, we are talking much different from our “stay at the same job for 40 years and retire” scenario. Although gaining in popularity, many freelancers wonder if buying a home is in the cards. The answer is yes!
Freelance – how to buy a home and get a mortgage
When it comes to mortgage qualification as a freelancer, first determine tax status. Is the buyer self-employed or a W2 employee with one or more companies? Typically, freelance means the buyer is self-employed. It seems most are sole proprietors, but creating an LLC or corporation is possible as well. Even though not as popular, some freelance as a W2 employee for multiple companies.
As a freelance, self-employed buyer, expect to provide the two most recent federal tax returns. Most mortgage programs will average the income and depending on the numbers, and there are many ways to calculate the income. An experienced mortgage professional can dig deep into guidelines and the tax return to find extra allowed income. Trust us; this could make all the difference.
Freelance income calculation tips
- Typically, average income over the last two years
- Income must be the same or increasing
- A slight drop in income may be acceptable
- Possible approval with only one year of tax returns
- Do not figure the income yourself
Notice the last two on the list. Yes, approval with one year of tax returns is possible! Although, it is challenging to obtain loan approval with just one year in business. Strong credit, low debt to income ratios, and other factors may help buyers receive approval with only one year of income verification. These factors could also help in the case of a previous low year.
One of the best self-employed income tips is not to figure income as a borrower. It is not the gross and is not always the net. Depending on the income type, deductions, and situations, there are many possible additions and deductions within the income calculation. Then, each mortgage program treats certain income areas differently. Thus, the best course of action is to provide complete documentation, answer the lender questions, and let the experienced professional do the math plus apply the guidelines.
OVM financial offers self employed income expertise
What does this mean? It means that OVM financial pulls all the stops when it comes to figuring freelance or other self-employed borrower income. Typically, self-employed income is not cut and dry. It takes the experience of a seasoned loan officer to find the right combination of income calculation and guideline application for each scenario.
OVM financial has created multiple layers of assistance for self-employment. It starts with the application and goes to the senior underwriting.
- Self-employed interview – asking detailed questions to improve understanding of the business
- Request documentation – up-front receipt of income documentation is key
- Loan officer/processor calculation – organize paperwork & review initial figures
- Income help desk – we have a department with the sole purpose of calculating tough income scenarios
- Senior underwriter assistance – after the income help desk, senior underwriters are pulled in to compare income to guidelines if necessary
Usually, more layers is not a good thing, but having access to multiple options to figure it out is a great thing, which is why OVM offers it. Our borrowers with work from home jobs deserve it!