How is the best way to obtain a home loan when leaving a good paying job to move out of state to be self employed?

Answer 1

Until recently a person with fairly good credit could obtain what is called a "no doc" loan with no money down. WIth this kind of loan, they would verify your credit, mortgage history, and reserves (money in the bank) and that would be suffucient. The rate would be higher than a "conforming" loan, but it would accomplish what you are after. Over the last few months the mortgage market for such low and no documentation loans has collapsed due to excessive foreclosures. So these loans are very hard to come by. Many lenders who did these loans before have simply closed. Others have changed their guidelines to eliminate such products. Very few are remaining and those that are can be very picky. Also, some states now make the broker or lender liable for defaults if they cannot prove that you earn enough to make the payments and you lose your house. At the moment, the best way to accomplish what you are after is to contact a mortgage broker in the area that you are planning to move to and explain your situation. Fill out a loan app and do what you can. Moving to a new state and starting a new self-employed job adds multiple layers of risk which is not very popular at the moment so expect to prove a considerable amount of reserves - at least 6 months mortgage payments in the bank and possibly more. Also expect to have clean credit for this kind of loan, a previous mortgage history - this loan is not for first time home buyers anymore. If you have even slightly rough, thin, or young credit, expect to have more difficulty. Exceptions may be made with more money down but in general, you need spotless credit for this kind of loan since the only thing holding up the loan file IS the credsit history - no employemnt, income or even residence history is available. Finally, expect to put at least 5% and as much as 15% down depending on the state and other factors. The no money down option for this kind of loan is pretty much gone from the market. As I said, due to the volatility in the non-prime mortgage market at the moment, these loans are VERY difficult to come by. Be prepared for a rough ride. Obtain the services of a local experienced broker - someone who has been in the business for at least 5 years and preferably 10 or more. This person will be very familiar with the current market and be able to find a lender if there are any left that can do these kinds of loans.