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Listing agents are often wary of accepting contracts from self-employed borrowers for a few reasons, so I thought I’d share these challenges and how we overcome them.

• Problem: Many loan officers simply don’t know how to calculate self-employed income

The number one reason why self-employed borrowers get a bad reputation for approvability is that many loan officers do not review tax returns ahead of time and calculate income correctly. They simply do not know what lines to add, subtract, and can’t calculate the income correctly. Tax returns can be complicated, particularly when there are both business and personal tax returns, and multiple investment properties.

• Solution: By properly documenting income during the pre-approval, and using Fannie Mae’s or Freddie Mac’s worksheet for calculating income, I can know the borrower’s income before they make an offer.

• For a self-employed borrower, we cannot calculate income without two years of tax returns and a year-to-date profit and loss statement.