Refinancing when self-employed

Can I refinance if I am self-employed? What are the qualifications that I must meet? How long do I need to be self-employed? These are just a few of the questions that many self-employed people ask when they are looking to refinance their mortgage on their home. Yes, you can refinance your home, even if you are self-employed. Most lenders will want to see a 2 year history of being self-employed, but some lenders will make exceptions on that requirement.

Many people that are self-employed use some type of alternative income documentation program when they are refinancing. The reason for this is because after writing off all of their tax deductions for their end of the year tax returns, they show a considerably less amount of income than what they actually made for the year.

One type of income documentation program that self-employed people use is what is called a stated income program. A stated income program is when a borrower does not want to document his income using traditional methods, such as W2's, tax returns, and/or pay-stubs, they are allowed to state their income on the loan application. The income stated should be the true amount of money that the borrower makes and needs to be reasonable for what they do. As you can see their is more risk to this type of loan and the interest rate will normally be slightly higher than a traditional full income documentation loan.