Mortgage success for self-employed borrowers seeking homeownership can face tricky obstacles to overcome. Self-employed music composer Matt Vander Boegh’s search for a bigger home nearly ended abruptly after applying for a preapproved mortgage from his credit union -- whom he’d banked with for years. To Matt’s shock, his beloved banking partner immediately denied his mortgage loan application!
After receiving full custody of his then four-year-old daughter, Vander Boegh was looking to buy a bigger house that could accommodate the growing needs of his family and business. He describes his home search as non-traditional in that he almost immediately found the perfect home before really knowing what his budget was or what he’d be preapproved for.
Almost as soon as his quest for financing as a self-employed borrower began, it was over. “Within a couple of days, I was rejected by my own credit union after being a loyal member for so long,” Vander Boegh said. “And at that point, I had really had my heart set on this house and it was like the rug just got completely pulled out from under me.”
His mortgage loan rejection was based on a common misperception of how the self-employed report income. In Vander Boegh’s case, his tax returns showed a year-over-year loss despite having a growing and successful business. In reality, Vander Boegh writes music for roughly 350 TV reality shows broadcast on cable networks. Something not fully reflected in his tax return.
Matt said he was more than happy to explain why his returns showed losses, However, the mortgage loan officer at the credit union didn’t ask any questions and wasn’t interested in Matt’s story.
“I'll do work today and I won't get paid on it for a year and that's just the nature of this business,” Vander Boegh said. “There's a huge waiting game before the money ever catches up with the work you've done. So they're looking at decreases in revenue. And I'm trying to say, ‘there is stuff forthcoming that I can tell you about it right now, but you're not seeing it on these sheets.’”
Mortgage Success for Self-Employed Borrowers
At the nudging of his real estate agent friend, Vander Boegh reached out to Fairway mortgage loan officer Leah Marchbanks and that made all the difference.
With the same documents, Vander Boegh was able to get the financing he needed to move into his home. The difference this time is that Marchbanks was willing to listen to his story. Vander Boegh said that Marchbanks essentially took a deep dive into his business to better understand its mechanics.
Marchbanks, a veteran loan officer, knows how to determine what a good file is going to be and she said Vander Boegh’s great credit score and everything else in his file was stellar.
Discovering mortgage success for self-employed borrowers seeking homeownership is a passion for Fairway Independent Mortgage loan officers.
“Self-employed people are the backbone of our economy, truly,” said Marchbanks.
“But they are harder to work with as opposed to somebody who's a straight W2 salaried person. So they also often need a little bit more touch, a little bit more insight to be able to put those deals together. And I find them challenging and I enjoy that.”
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