Refinancing your home as an IC (Independent Contractor) can be a major hassle. And even after you jump through all the hoops, it’s not a sure thing that you’ll qualify. Some of the items that you need when you refinance as an IC are: signed individual tax returns and all schedules from the past 2 years, signed federal tax returns and all schedules for the past 2 years, a year to date balance sheet, a year to date profit and loss statement, and a business credit report.
After you collect and send all of those documents in, the bank doing your refinance must evaluate your income. There are 2 steps to this. One is meeting the required debt to income ratio, and the other is looking at your annual income. If your income has declined in the past 2 years, you will most likely not be eligible to refinance even if you meet the debt to income ratio.
Food for thought!
Written by Amanda Freeman, a Consultant’s Financial Planner