Did you know over 600,000 new businesses start every year in the United States?
If you’re among the entrepreneurs who have launched more than one business, thumbs up. Small businesses are the backbone of the American economy. Owning multiple businesses also means you’re not afraid of the high failure rate small businesses face.
Now that your businesses have picked up, you probably want to treat yourself with a new house. But like most Americans, the only way to afford the house you want is to take out a mortgage.
The big question is: will you qualify?
Here’s everything you need to know.
Why Mortgage Lenders Are Wary of Entrepreneurs Owning Multiple Businesses
As an entrepreneur with several businesses, you probably have a couple of other personal and business loans. After all, a good number of entrepreneurs rely on debt to start their businesses.
If this is the case, mortgage lenders can see you as a high-risk borrower.
If some of your businesses crumble or become less profitable, your income will be affected. Consequently, you might not be able to pay all existing loans. And considering that mortgages are typically large, you can see why any lender will be reluctant to do business with you.
So, how can you improve your chances of getting a home loan?
Check Your Personal Credit Score
It’s not uncommon for business owners to become too invested in their business’ credit scores and forget about their individual scores.
Well, to get a conventional mortgage you need a score of 620 or higher.
Before heading to a lender, ensure your credit score meets this range. If not, take credit-building measures. For instance, pay your credit card balances to maintain a low credit utilization ratio. Keep in mind, though, increasing your credit score isn’t a quick process.
Prepare Your Income Statements
Any lender will want to know more about your income, especially when you’re not formally employed.
This is why you must prepare your income statements. If you’ve not been paying yourself, it’s time to start; otherwise, lenders will conclude you don’t have the ability to repay the amount you’re borrowing. They won’t care that you own multiple businesses.
Find a Reliable Mortgage Lender
After straightening up your financial information, the next step is to find a lender. But there are so many lenders out there, each with different requirements and application processes.
Go online and search “mortgage lenders near me.” Pick a couple of names from the first page and get in touch for more information. Ideally, you want a lender who has a reputation for offering mortgage loans to self-employed people.
Alternatively, you can hire an experienced mortgage broker to help you secure a good deal.
From Business Owner to Homeowner
Owning multiple businesses is a big achievement. Now it’s time to add a home to your asset portfolio. With this guide, you’re now in a stronger position to secure a home loan, despite the challenges entrepreneurs and self-employed people face.
Good luck and keep reading our blog for more tips and insights.