Ep 26 | How To Buy Your FIRST HOUSE As A Self-Employed Stylist

Let's talk about something that might be keeping you up at night - buying a home when you're self-employed. I get it. The thought of applying for a mortgage without a W-2 can be scary. But what if I told you it's not as impossible as you think?

I recently sat down with my friend Gene Griffin, a mortgage expert, to bust some myths and uncover strategies that could turn your homeownership dreams into reality. So let's dive in and tackle those fears head-on!The Three Pillars of Mortgage Approval

The Three Pillars of Mortgage Approval

Gene dropped some helpful tips about what lenders look at when considering a mortgage application. He calls them the "three pillars":

1. Income

2. Assets

3. Credit

Luckily, you don't need all three to be perfect. Gene says, "If we've got one and a half strong pillars, we can make something happen." That's great news for those of us who might be struggling in one area!

"But I Don't Have a Steady Paycheck!" - Rethinking Income for Self-Employed Stylists

I know what you're thinking - "Bex, my income fluctuates. How can I possibly qualify for a mortgage?" Here's the truth: lenders are starting to look at our income differently.

Gene shared the power of "bank statement loans." Here's how they work:

1. Lenders look at 12-24 months of your business bank statements.

2. They calculate your income based on your deposits.

3. They typically use 50% of this as your income, assuming the rest goes to expenses.

But it gets better! Gene explained, "If you have a CPA, we can take a third party CPA letter that says, 'Hey, I went through their expenses. Only 15 percent of their income is expenses.' So we can use that and leverage. So that 10,000 a month all of a sudden becomes 15,000 a month."

Pro Tip: Keep your business and personal finances separate. It makes this process so much easier and shows lenders you're serious about your business.

"My Credit Score Isn't Perfect" - It Doesn't Have to Be!

Let's be real - many of us have made credit mistakes. Maybe you've missed a payment or two, or perhaps you've had to rely heavily on credit cards to get your business off the ground. The good news? You don't need a perfect 800 score to buy a home.

Gene emphasized that while a higher score is always better, you've got options:

• 620 or higher: This is the target for most traditional loans.

• 700+: With this score, you're in great shape for approval.

But even if your score is in the 500s, there's hope! Gene shared, "I've seen people with a bankruptcy a year ago have over 700 credit in less than a year because they knew what to do."

Quick Credit-Boosting Tips:

• Work with a credit professional

• Pay bills on time, even if it's just the minimum

• Keep credit card balances low

• Don't close old credit accounts

"I Don't Have a Huge Down Payment" - You Might Not Need One

One of the biggest myths about buying a home is that you need a massive down payment. But Gene introduced me to some loan options that could work with what you've got:

1. FHA loans: These can require as little as 3.5% down.

2. VA loans: If you're a veteran, you might qualify for a zero down payment loan.

3. Bank Statement Loans: These often have more flexible down payment requirements.

Remember, as Gene said, "Cash is still king." But that doesn't mean you need a royal fortune to get started.

"Traditional Banks Always Turn Me Down" - There Are Other Options

If you've tried to get a mortgage before and been turned down, I feel you. It's disheartening. But here's what I learned from Gene - traditional banks aren't the only game in town.

Gene works as a mortgage broker, which means he has access to multiple lenders. He explained, "In the broker space, I don't work for a bank. In fact, I have about 150 wholesale mortgage banks that are competing for my business."

This means more options for us self-employed folks, including:

1. Bank Statement Loans: We talked about these earlier - they're a game-changer!

2. 1099 Loans: Similar to bank statement loans, but even easier and quicker.

3. Profit and Loss Loans: These use your business's profit and loss statements.

Gene's passion for these non-traditional loans was clear: "I'm a big champion for these loans. Because I find that a lot of self-employed people, specifically people in the beauty industry, they don't really even dream about homeownership because they don't feel like they're going to get there."

The Power of Professional Help

Throughout our chat, Gene emphasized the importance of working with professionals. Here's why:

• A good CPA can help organize your finances and maximize your reported income.

• Credit professionals can help boost your score faster than you might think.

• Mortgage brokers like Gene have access to multiple lenders and can find the best fit for your situation.

Gene shared, "I'll work with clients for two, three, however long it takes, you know, and I'll tell you right now, I'll help the wealthy person add a 10th property to their real estate portfolio. But if I see somebody out there that's working hard, doing the right things, I'll do backflips for them."

"I'm Not Ready Yet" - Start the Process Anyway

One of the most powerful things Gene said was, "Don't wait till you think you're ready, right? Call me so we can figure out where are we at today." This really resonated with me because I know how easy it is to put off our dreams thinking we're not ready.

Remember, even if homeownership seems far off, starting the process now can set you up for success sooner than you think. Gene mentioned, "One of the things I find is people say, I'm two years out, then they start working on this stuff. And then in six months, they're like, wait a minute, I'm actually ready."

Quick Summary

Stylists, I hope this chat with Gene has opened your eyes to the possibilities of homeownership. Don't let being self-employed hold you back from your dreams. With the right knowledge, professional help, and a bit of planning, you can absolutely make it happen.

Remember:

1. Focus on improving your credit, income documentation, and savings.

2. Explore non-traditional loan options designed for self-employed individuals.

3. Don't be afraid to reach out to professionals for help.

4. Start the process earlier than you think you need to.

Your skills behind the chair can absolutely translate into keys to your own front door. So go ahead, dream big, and take that first step towards homeownership. You've got this!

Gene's contact info:

Gene Griffin, Sr. Mortgage Advisor
(NMLS# 2234848)
Summit Mortgage Solutions powered by Barrett Financial Group, LLC (NMLS# 181106)
Email: genegriffin@barrettfinancial.com
Phone: (512) 517-9822
Web: www.SummitMortgageSolutions.com