If your home-based business is outgrowing your current space, it’s time to relocate. However, as an entrepreneur, you don’t always have the benefit of W-2s or even the same payees year to year. When you’re self-employed, staying organized is key. Here are four tips to help you prepare for buying a home that suits your needs as an entrepreneur throughout the purchasing process.
Use a Realtor
It doesn’t matter if you bought a home before and are familiar with the steps, using a Realtor is a great choice. An experienced agent can help you search for a home in your budget and that has the space you need for your home and business. And, because code regulations are different from county to county, your agent can help you keep track of where you can run a home-based business. They may also have access to homes before they hit the MLS, which gives you a better chance at finding something in today’s fast-paced market.
Make a to-do list and a checklist
Once you have your agent in place, it’s time to make a list or two. First, sit down and go over your budget to determine what you can afford. Your mortgage lender can help with this, and they can also help you get pre-approved. You’ll then want to check your credit report and attend a few open houses before you buy. Next, make a list of must-have items as well as features that would make the next house you find more desirable. A non-negotiable might be a home office while something in the “want” column may be a swimming pool.
Rectify issues with your credit
If you ran into issues during the preapproval process, it’s time to take control of your credit and debt. Eliminating debt is one of the best ways to improve your credit score, and improving your credit score can help you get a better rate and more favorable loan terms. Keep in mind that it can take up to two years for your credit to bounce back, and up to 10 years if you’ve had a foreclosure, according to CreditCards.com. Typically, lenders favor buyers with a “very good” credit score of 740 or higher.
Collect your documents
Even with perfect credit, freelancers and entrepreneurs have other hoops to jump through when buying a house. In addition to your last two years of tax returns and bank statements, your lender may also ask for information on your retirement funds and cash assets. Further, you may be required to provide a profit and loss statement. In some circumstances, verification from freelance clients will also be necessary before your lender can get your loan through the underwriting process.
Overall, buying a house as a home-based business owner is not that different than the process for everyone else. But, because you are the source of your income, there are a few more documents and a handful of other hurdles. Using a Realtor and being organized can streamline the process so that you don’t get overwhelmed. Despite the minor inconveniences, moving is an exciting time, and moving for your home business opens up room for expansion and growth.
AngelytiX Consulting provides business coaching and financial and marketing consulting to meet small business challenges and take you to the next level. Call 310-955-1369 to schedule a consultation today!