3 ms·

I'm building mortgage for the self employed

2 points by pkollamp 5y ago

pkollamp 5y ago
Some background on this whole thing and how I came about to this problem. In 2020, I started working at a bank in ops/data eng. Lot of operational work but ton of room for improvements. I didn't fit well into the culture. I'm more of a "see a problem, dive in and let's fix it" type of person. Banking is heavily regulated so I just kept on running into a wall. I did that for over a year and left to start consulting. Landed my first client in financial services. I could finally do the ops projects I wanted to do and get paid for it! I learned a lot from this experience, it was a startup scaling and growing at a fast pace so jumping in and helping them build systems and processes was a blast. Come January 2022, I'm on twitter and scrolling down as I usually do and I come across this tweet about how getting a mortgage as an entrepreneur is a terrible process. What surprised me was that there were hundreds of other entrepreneurs, contractors and small business owners on the same thread sharing the terrible experience they went through just trying to get a mortgage. I thought this was a joke. How are the people I look up to not able to get a mortgage or go through this painstaking process of buying a home. It just didn't make any sense to me. I went on Reddit and found a few subreddits where I could ask if others also felt this pain. I needed to make sure this wasn't some twitter echo chamber type of frustration. Lo and behold, folks on reddit are also complaining... So then I went down this rabbit hole of figuring out the mortgage industry. I started calling up lenders, brokers, and banks. Listening to all these niche podcasts about mortgage...exciting I know haha. After asking for recommendations and calling up brokers, vetting them to understand how they think about their clients and their track record in helping self employed folks. I finally got down to two people that I could rely on to help me with this. Launching my MVP. What you see on the website currently is an MVP. It's simple. You fill out the form and I connect you with a lender based on where you live and what you're looking to do. Here's what I'm going to be doing in the next few months (feel free to critique this): • Blog Posts - There is a layer of education that is missing for the consumer. Often they feel as if they are losing someway/somehow. Demystifying the 'Mortgage for Self Employed' topic can help fix this. • Building relationships with agents - I'm aware there are regulations that prevent agents from benefiting financially by asking their client to go to a certain lender. However, in the case that their client is self employed and in need of a mortgage, we can connect them to a lender who can get the client a mortgage and actually close on time, which improves the customer experience which comes back on the agent. These are my two growth levers that I've confirmed on however I do think there's room for more ways to grow. One step at a time. There is a lot of room for disruption in this industry. IMO it's important to have a human guide you through the process of getting a loan but all the operational work could definitely be automated if not improved with the right tech. What are your thoughts? Any entrepreneurs in here who have also gone down the process of buying a home and felt this frustration too? Feel free to drop any feedback.
- h2odragon 5y ago
  I'm sure you've got customers, the lending rules about "proof of income" and "duration of employment" suck for the self employed / those not paid the usual ways. However, aren't those rules imposed on lending institutions from outside, and thus are hard to dodge no matter where you go?
  - pkollamp 5y ago
    Yes this is partially true. Most lenders will not consider you if you haven't been in business for two years (really three depending on when you start your business). The only exception that I heard from the broker that I'm working with is if you were previously employed and then started your own business doing the same work without any disruption. Also, mortgages are broken up into two buckets, QM-Qualifying mortgage and NON-QM -Non-Qualifying Mortgage. Most self employed folks are going to run into issues applying for a QM because they write off so much their net income is too low for the property they want to purchase. However, This Non-QM space is great because they have mortgage products that are made for self employed people and investors. Bank Statement Loans, so with these the lender is looking at your bank statements (business) to understand if you would be able to service the mortgage. The downside of Non-QM is that rates can be higher than your QM products, however after a few months/payments you can refinance out of a Non-QM product into a QM product. Keep in mind as a business owner you're already taking advantage of the US tax code. Also, interest is tax deductible. Let me know if that was helpful!

2 points by pkollamp 5y ago

Some background on this whole thing and how I came about to this problem. In 2020, I started working at a bank in ops/data eng. Lot of operational work but ton of room for improvements. I didn't fit well into the culture. I'm more of a "see a problem, dive in and let's fix it" type of person. Banking is heavily regulated so I just kept on running into a wall. I did that for over a year and left to start consulting. Landed my first client in financial services. I could finally do the ops projects I wanted to do and get paid for it! I learned a lot from this experience, it was a startup scaling and growing at a fast pace so jumping in and helping them build systems and processes was a blast. Come January 2022, I'm on twitter and scrolling down as I usually do and I come across this tweet about how getting a mortgage as an entrepreneur is a terrible process. What surprised me was that there were hundreds of other entrepreneurs, contractors and small business owners on the same thread sharing the terrible experience they went through just trying to get a mortgage. I thought this was a joke. How are the people I look up to not able to get a mortgage or go through this painstaking process of buying a home. It just didn't make any sense to me. I went on Reddit and found a few subreddits where I could ask if others also felt this pain. I needed to make sure this wasn't some twitter echo chamber type of frustration. Lo and behold, folks on reddit are also complaining... So then I went down this rabbit hole of figuring out the mortgage industry. I started calling up lenders, brokers, and banks. Listening to all these niche podcasts about mortgage...exciting I know haha. After asking for recommendations and calling up brokers, vetting them to understand how they think about their clients and their track record in helping self employed folks. I finally got down to two people that I could rely on to help me with this. Launching my MVP. What you see on the website currently is an MVP. It's simple. You fill out the form and I connect you with a lender based on where you live and what you're looking to do. Here's what I'm going to be doing in the next few months (feel free to critique this): • Blog Posts - There is a layer of education that is missing for the consumer. Often they feel as if they are losing someway/somehow. Demystifying the 'Mortgage for Self Employed' topic can help fix this. • Building relationships with agents - I'm aware there are regulations that prevent agents from benefiting financially by asking their client to go to a certain lender. However, in the case that their client is self employed and in need of a mortgage, we can connect them to a lender who can get the client a mortgage and actually close on time, which improves the customer experience which comes back on the agent. These are my two growth levers that I've confirmed on however I do think there's room for more ways to grow. One step at a time. There is a lot of room for disruption in this industry. IMO it's important to have a human guide you through the process of getting a loan but all the operational work could definitely be automated if not improved with the right tech. What are your thoughts? Any entrepreneurs in here who have also gone down the process of buying a home and felt this frustration too? Feel free to drop any feedback.

h2odragon 5y ago
I'm sure you've got customers, the lending rules about "proof of income" and "duration of employment" suck for the self employed / those not paid the usual ways. However, aren't those rules imposed on lending institutions from outside, and thus are hard to dodge no matter where you go?
- pkollamp 5y ago
  Yes this is partially true. Most lenders will not consider you if you haven't been in business for two years (really three depending on when you start your business). The only exception that I heard from the broker that I'm working with is if you were previously employed and then started your own business doing the same work without any disruption. Also, mortgages are broken up into two buckets, QM-Qualifying mortgage and NON-QM -Non-Qualifying Mortgage. Most self employed folks are going to run into issues applying for a QM because they write off so much their net income is too low for the property they want to purchase. However, This Non-QM space is great because they have mortgage products that are made for self employed people and investors. Bank Statement Loans, so with these the lender is looking at your bank statements (business) to understand if you would be able to service the mortgage. The downside of Non-QM is that rates can be higher than your QM products, however after a few months/payments you can refinance out of a Non-QM product into a QM product. Keep in mind as a business owner you're already taking advantage of the US tax code. Also, interest is tax deductible. Let me know if that was helpful!