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  • Writer's pictureLendX Financial

Home Equity Loan For The Self-Employed

Self-employed people often complain of a lot of challenges when they approach the big lending organizations such as banks to acquire home equity loans. This is mainly due to the strictness of the qualification criteria for these loans. Failure to qualify for such loans makes self-employed people reach out to private lenders for their home equity loan requirements. Private companies or even individuals are the private lenders who provide interest-only home equity loans or mortgages which are short-term in nature. They typically provide these to those who cannot fulfil qualification criteria with regular mortgage channels such as the primary banks. Private lenders are different from the regular mortgage route as they set their own rules and are not governed by any regulations unlike the banks. They don't have any set qualification criteria either and it is totally up to them to extend a home-equity loan to self-employed people. If they do extend you the loan it comes at a higher interest rate than the regular banks. What is required at the end of the self-employed borrower is considerable home equity against a higher risk of loan payback default. Home equity loan qualification requirement by banks Some documentation is required by the banks and A lenders before they qualify you for a home equity loan. These include personal income and tax statements which can be quite a challenge for those who are self-employed as they have to prove their income. The self-employed also need to show more expenses and less income to pay less in taxes. Ultimately, this becomes a major hindrance for those who are self-employed in the way of their securing a home equity loan from major lenders. Apart from tax statements and personal income documents, the traditional lenders also ask for a variety of paperwork which includes business license, proof of tax payments, financial statements of the business, proof of business, revenue forecast verification, as well as credit scores of business and borrower. If applying with traditional bankers, make sure to keep all these documents handy with your loan application. What it takes to get a home equity loan from a private lender Getting your home equity loan from a private lender is a much easier option though it comes at a price. You must however know that this is quite a common route nowadays. Their qualification criteria is not as stringent as traditional lenders and their focus is on your home equity than your income or credit score etc. You will however need to show a license of being in business, bank statements (number of months varies from lender to lender), and personal identification forms. Private lenders assess the risk (the lower your chances to pay back the borrowed amount, higher the risk to the lender) to determine your eligibility. If you are a self-employed person who is interested in securing a home equity loan from a private lender or want to know in greater detail about it, do write to LendX Financial.

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