Blog | Avrus Mortgage

October 5, 2016

How to Get a Self-employed Mortgage in California

Self-employed mortgages are touch to nail down…especially if you go to a bank. Banks are risk averse, and are not the most flexible institutions. And property in California is expensive, so banks have extra cause to be cautious.

The fact is that self-employed people don’t fit easily into any mould, which is in itself a risk. Self-employed income is less predictable than salaries. And banks often squirm in their seats.

But self-employed people can get a mortgage if they try.

But don’t try at a bank. An independent mortgage broker is a much better bet, because they are not stuck in the mentality of fitting people into pre-defined packages. At Avrus, we take a look at your financial situation and determine how much you can afford to borrow based on your real situation, not on how well your real situation fits into a storyline created at a bank‘s head office.

We don’t mind taking the time to ensure that you have the paperwork lined up. We know that it’s more complex than to apply with a salary. But we specialize in challenging situations, and helping self-employed people get a mortgage is at the top of our list.

How Self-employed People Can Improve Their MortgageChances

Before you even make a pitch for a mortgage, there are some things you can do to increase your chances of success.

Pay down debt. The less debt you have, the more comfortable any lender will feel loaning you money. It’s not just the banks that feel that way. So do other financial institutions. So do our network of private lenders and investors. Debt-free is the best. This is something to work on as soon as you start thinking about buying a home. Don’t wait for the last minute.

Fix your credit score. Your credit score is your flag of trust. Lenders will use it to determine how trustworthy a borrower you are in California as much as anywhere. If you want them to hand you money, you’ll need their trust. The higher your score, the better for any borrower, but especially if you are self-employed.

Document your income over the years of self-employment. The hardest time to get a mortgage is when you have just become self-employed. You have no track record to show. In such cases, waiting a year to buy might not be a bad idea. If you have a track record that shows steady income or growing income, that’s a good sign. That’s what lenders want to see.

Even better if you can show that you have built up a “rainy day fund” in the event that you hit a dry spell. In many self-employed niches, especially for freelancers, there is a roller coaster ride of alternating feast and famine. Lenders know this, and they want to see how you’ll manage payments during the periods of famine.

The bigger the down payment, the better. Why? Three reasons. First, it means they have to lend you less, which means they have less to lose. Second, it means you’ll have lower payments, so the likelihood of you making them all is increased. Third, you’ll have more equity invested in the home. That means that if you do run into trouble with self-employed income, you’ll make greater efforts to protect what you’ve invested in the home. It also means that if you have to sell, even in a down market, the lender won’t take a loss.

Bring an open mind. Lenders might be more particular about the type of arrangement they are willing to make with a self-employed borrower. They might be more specific about the terms they’ll offer, for example. You might have less flexibility.

Buy a house before setting out on the self-employed path. It’s that first mortgage that’s the hardest. All of the tips above are still important for when you renew that mortgage. But the renewal will be easier, because time will have passed. In that time, you will have paid off some of the principal. The house will have increased in value. Your equity will represent a greater percent of the home’s total value. And as the years go by, you’ll be able to document a more stable income over a longer period of time.

We’ve already posted a number of other tips for self-employed people to qualify for a mortgage in a previous blog post. We recommend you read these, too.

Being self-employed has huge self-actualization rewards. But it brings with it some financial challenges. Don’t worry, these are hurdles, not walls. An independent mortgage broker is not afraid to leap those hurdles with you, so that you can buy a home. Give us a call today.

October 5, 2016

Top 8 reasons to refinance your current home

Refinancing has grown popular over the years. What this means is that people decide to change their current mortgage.

They come to us for a new mortgage not because they want to move to a new town or a new neighborhood or a new house. They want to stay in the same town, in the same neighborhood, in the same house.

They just want a new mortgage.

There are several reasons why somebody might want a new mortgage, even if they don’t want to move. Here are the top 8:

To save money. This is the best reason to refinance your home, and it happens whenever interest rates trend even slightly down.

Simply put, you look at your current mortgage. You look at the rates being offered on a new mortgage. You see that the rates being offered are lower than the rate you are paying now. You do the math, and realize that if you switch your current rate for the new, lower rate, you could save hundreds, maybe even thousands, of dollars.

So you pick up the phone and call us. And we smile, because we know we are about to help you get the lowest rate possible.

To upgrade your home. Less frequent than for saving money, people refinance their homes to pay for a major upgrade. Upgrades cost money. If they are large enough, they might cost a lot of money.

And there’s a lot of money available as stored equity in your home. Some people tap into that equity to cover the costs of the upgrade, knowing that the value of the house will rise once the upgrades are complete. This is usually done for big projects, such as:

adding an extension to the house
adding a garage
building an in-ground pool

To restructure your career. This is another happy reason to refinance your mortgage. Sometimes people want to chuck the nine-to-five and become a freelancer or an entrepreneur.

Freelancers and entrepreneurs who want to buy a new home often face problems getting a self-employed mortgage. Not all the banks consider them a safe risk. Not all the banks have the patience to review their more complex income paperwork. If the bank says “No”, that’s OK. Avrus says “Yes” to self-employed mortgages.

When making a career change, you might want to refinance to give yourself more flexibility. A new entrepreneur might want to rearrange all his finances so as to be able to focus on his new business venture.

To pay for the new kid on the block. Kids cost money. And sometimes those expenses were not planned when you arranged your mortgage. Refinancing is a useful tool you can use to help rearrange your finances to pay for the new kid on the block - your son or daughter.

Sure, it’s not good that you have more expenses than planned. But at least those expenses are for a wonderful reason.

To consolidate debt. This is the “make lemonade out of lemons” reason to refinance. It’s bad news that a family might have so much debt that they need to consolidate, but it’s good news that by consolidating that debt they are able to put their lives back in order.

Usually a debt consolidation mortgage comes at a much lower interest rate than a variety of credit card debt and consumer loans that are outstanding. By consolidating this debt at a lower interest rate, you can spend less money paying the interest and more money paying down the debt.

To survive a downsizing. This is not such a happy reason to refinance. Sometimes people lose their jobs. They get laid off. They get fired. They get downsized. Their company shuts its doors.

When you lose your job, making the mortgage payments might suddenly get more challenging. We understand. That’s a good time to refinance your home to reduce the monthly or weekly payments until you can get back on your feet. It’s not a happy reason to refinance, but it is a good thing that refinancing is available to you in that kind of situation.

To care for your sick or injured self. What happens if you suddenly get sick or injured. You might not be able to earn income, and medical expenses could hit the roof. Refinancing to the rescue! It’s a horrible reason to have to refinance, but it’s a good thing the option is there.

To care for a loved one. You are not the only one who gets sick or injured. Your spouse might. Your child might. Your parent might. And although you might be able to keep earning your income, the medical expenses might be prohibitive. Refinancing your mortgage is one important thing you can do to keep some control on your household finances.

Whatever reason you want to refinance, we can help you navigate the options and the paperwork. Everyone is welcome; no problem is too big or two small.

October 5, 2016

Thinking of Relocating? California Dreamin’…

It’s not just the Mamas and the Papas who once upon a time were “California dreamin’”—you could be, too. There’s so much to say about this state, so many good reasons to move here. California is a gorgeous place filled with vineyards, Mexican food, and startups (not necessarily in that order). You can hike in the desert, ski in the mountains, and swim in the ocean, and—if you have the energy for it—you can do all of that in one day! Except for the northernmost part of the state, it’s sunny all the time. Some people think of California as heaven on earth.

You could think of it as home.

And it doesn’t have to be difficult. These days, many real estate offices also offer relocation programs and destination services to help you make your transition. The former can include a single point of contact to coordinate all services, needs analysis, relocation counseling, a qualified real estate agent on both ends, and follow-up; the latter can include area counseling, a community information packet, an area tour, the viewing of selected properties that will meet your criteria, progress monitoring, and the coordination of van services, among other things.

What is missing from this picture? That’s easy: your mortgage services! Even as you’re falling in love with an area, remember that the property you want can be yours only if you get the best possible financing, and that’s where we come in.

At Avrus Financial and Mortgage, we have decades of experience helping people secure just the right mortgage loan, at the best possible interest rate and with the best possible terms. No two family situations are the same, and we don’t treat any two clients alike, either. We know what went into your decision to relocate, and your decision to find just the right community for your family; and we know, also, how to look at all aspects of your financial situation so that we can offer you the very best options. For you. For your family. For your California home.

Why not ask us how… today?