Question: I was laidoff from my fulltime job in spring of last year. Since then >I’ve managed to land several contract jobs in my field, one for one >month last fall and another 4-days per week since the beginning of the >year. Unfortunately this employer is closing it’s doors.
It’s too late for that now, but if you had known in advance you could have secured a HELOC (home equity line of credit) while still employed.
>I’m starting to run out of ready cash and would like to hold off selling >my house as long as possible. Since I have quite a bit of equity in my >house I thought it might be possible to get a line of credit loan on my >house to help tide me over until I can find steady employment again. >All of the lenders I’ve talked to want to see 2 years of self-employed >history before even considering a loan. Any suggestions as to where I >might find a more “friendly” lender? I’d rather not just apply to >multiple lenders, generating multiple credit checks, rejections etc.
Answer: Finding a home loan when self-employed is always challenging. That’s because the loan is really against your future income; your house just serves as collateral. If you can’t document future income, the lender is going to wonder how you’re going to pay the loan back. Multiple credit checks within a short time interval generally don’t lower your score more than a single check.
What you are looking for is a “no-doc” loan, in which you are not required to document your employment and income. You can expect to pay a higher interest rate, but if your credit score is decent you may well be able to find one.
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