Financial literacy isn’t my strong suit. I’ve had periods of unemployment. Last year, while running a startup, I paid myself 60k, but then I ended up on unemployment after the investment money ran out. This January, I started running my marketing agency full-time and now earn between 12-15k per month. However, I don’t pay myself a salary; I just use my credit card for personal expenses. Given my situation, including a credit score in the high 600s and 30k in credit card debt, could I possibly qualify for a mortgage loan?
Why do you think now is a good time to commit to a mortgage?
Niall said:
Why do you think now is a good time to commit to a mortgage?
My dad offered to help with the down payment if we share the profits from the investment. My business is finally taking off, earning about 12k monthly. I’m considering a 130k condo, estimating a $1300 mortgage. Otherwise, I’d be paying $1400 in rent without building equity.
@Derry
Given your unstable employment history and new business, committing to a mortgage might be risky.
Niall said:
@Derry
Given your unstable employment history and new business, committing to a mortgage might be risky.
I appreciate your insight. Impulsiveness has been an issue for me, and I’ll consider your advice seriously.
@Derry
Do you mean 5000 sq ft? 500 seems extremely small.
Ainsley said:
@Derry
Do you mean 5000 sq ft? 500 seems extremely small.
Where can you find a 5000 sq ft condo for $130k?
Ainsley said:
@Derry
Do you mean 5000 sq ft? 500 seems extremely small.
I did mean 500 sq ft. After living in NYC and SF, small spaces are what I’m used to.
It seems like you’re missing some key details about your financial situation. It’s not just about your total debt, but what counts is your minimum monthly payments towards your debt-to-income ratio. To qualify for a mortgage, lenders typically require two years of tax returns to verify income, which might be a problem if you’re showing no regular income.
@Parker
Thanks for clarifying that. Perhaps I should consider renting for another year to save more and stabilize my income. I’m also reconsidering how I manage my business finances. The potential for property value increase in my area tempts me to buy now rather than continue paying rent.
@Derry
If you’re the sole owner of your marketing agency, the profit after expenses is essentially your income. For mortgage qualification, most lenders require two years of such income history.
How will you manage a mortgage payment if you’re not formally paying yourself and have significant credit card debt?
Tru said:
How will you manage a mortgage payment if you’re not formally paying yourself and have significant credit card debt?
I’ve been managing to save some money lately; I’ve got about 20k saved.
@Derry
It might be wiser to clear your credit card debt before considering a mortgage. Banks will want to see a stable income history, and without that, you might struggle to secure a good interest rate.
@Tru
Achieving a higher credit score will also help secure a better mortgage rate. It’s important not to rush into buying property under financial pressure.
@Derry
You should use your savings to pay off your credit card debt first to avoid high interest.
@Derry
Be cautious as your business income will be taxable. Mixing personal and business finances can also increase your liability in case of legal issues.
How long has your business been operational, and what’s your net income?
Ray said:
How long has your business been operational, and what’s your net income?
My content marketing agency costs about $2000 a month to run, so I net between $10,000 to $13,000. I’ve been doing this full-time for about a year now.
@Derry
For self-employed individuals, lenders generally need to see two years of consistent income documented through tax returns.