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| HousingWire Newsletter |
The key is working with an independent mortgage broker who can match them with the right loan
The gig economy, comprised of self-employed and freelance workers, has been growing over the last few years. According to the Bureau of Labor Statistics, there were 9.6 million self-employed workers in the U.S. in 2016, a number projected to increase to 10.3 million by 2026.
As participation in the gig economy grows, so will the number of self-employed people looking to buy a home. It’s a great opportunity for real estate professionals to expand their business – but it’s not as straightforward as it may seem.
In a 2018 report titled “The Continued Impact of the Housing Crisis on Self-Employed Households,” the Urban Institute used data from the American Community Survey to highlight some of the issues self-employed borrowers face when applying for a mortgage. Among its findings, the Urban Institute reported that self-employed borrowers “can be more difficult to underwrite in part because they, unlike salaried workers, experience greater income volatility and lack pay stubs or W-2 wage statements that make it easy for lenders to verify and document income.” The irony of this reality is that many people taking on gig economy work are doing so in order to reduce their debt or save for a down payment — the very things they need to buy a home.
While research shows that a lack of standard income documentation can make it difficult for self-employed homebuyers to fit into traditional mortgage programs, there are plenty of loan products designed for this group – if you know where to look. Working with an independent mortgage broker can alleviate common pain points and make it more likely for a self-employed buyer to be approved for a loan. Because mortgage options for individuals who are self-employed can be limited by documentation requirements, a mortgage broker can help determine what alternate documentation, such as bank statements, can be used to verify their income. Often, they can even gather and manage that paperwork on behalf of the borrower, helping to simplify what can be a complex process.
In addition, unlike big banks and online retail lenders, independent mortgage brokers are not limited to a small set of mortgage options. They can work with many different lenders to find the best program to fit a self-employed homebuyer’s needs. They can offer wholesale rates that those direct-to-consumer lenders cannot. They can even work with a portfolio lender, which will have more flexibility on underwriting.
Mortgage brokers also have the flexibility to work around the nontraditional schedules often kept by freelance and self-employed workers, as they are accessible far beyond traditional banking or office hours. They can make appointments convenient to the buyer’s location and schedule, whether the buyer is working from a home office or on the road, or in the early morning through late at night.
Self-employment shouldn’t keep anyone from qualifying to buy their dream home, and, with the right partner, real estate professionals can make that dream happen.
