In recent years, an increasing number of American workers have made the switch from full-time employment to a contract or freelance worker. The pandemic accelerated this trend, as workers sought more flexible positions that would allow them to care for children or work from home.
Freelancing has many benefits. However, in a financial system that is still very much built on traditional employment, it can make certain things more difficult – like qualifying for a mortgage. Unfortunately, the pandemic has accelerated this trend as well. If you’re a freelance worker, you will likely have to provide even more proof of income before being considered for a mortgage.
Buying a Home as a Freelance Worker
The regulations imposed after the 2009 housing market crash, while important and necessary, have made it more difficult for people who are self-employed. Often, self-employed workers shore up their income through tax deductions. This amounts to a higher net income. But it’s not as easy to provide proof of that income, and it appears less stable to a mortgage company.
Before lending to a freelance worker or contractor, banks usually require two years of tax returns and some proof that they’re still “in business”. You may also have to provide a profit and loss statement.
This is all doable if you’ve been in a stable freelance or contract job for at least two years. But that’s not always possible, especially if you’re new to the gig economy – as so many people are right now.
Further, the pandemic has caused a great deal of economic upheaval. Banks are now being extra careful when approving mortgages. Freelance workers will need to provide even more documentation. This takes time. In a competitive market, it can cause a prospective buyer to lose out on a home they love.
More Options with a Contract for Deed
If you’re having trouble qualifying for a mortgage as a self-employed, contract or freelance worker, consider a contract for deed (CD). Slow Flip offers financially stable homebuyers the opportunity to purchase a home on a contract for deed until they qualify for a mortgage. You’ll just need a down payment, a reasonable debt-to-income ratio (considering all income sources). You must also have a plan to pay off the CD within five years.
Could a contract for deed be the tool you need to get into a house today? Give us a call to discuss your situation.
The Slow Flip contract for deed program helps families in the Twin Cities metro area of Minneapolis, St. Paul and surrounding suburbs purchase a home using a contract for deed, or CD, when a mortgage is not possible. The Slow Flip contract for deed can be an ideal tool to purchase a home when buyers need time to adjust their income, credit, debts or other financial components so they can eventually qualify for a mortgage.
Are you or your clients interested in learning more about the Slow Flip contract for deed? Contact us at 952-417-0000 today.