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2008-02-08 08:15:38
Is It Possible to Get a Mortgage to Buy a House if You Are a Young, Professional Poker Player?
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This is a pretty common scenario right now.
You have a young poker player, say 21 years old, who makes his living playing poker online. This player dropped out of school at the age of 19 to play poker full-time and doesn't have any other income.
This player has done well enough for himself that he has managed to accumulate a fairly substantial bankroll. This player is tired of renting an apartment or of living at home with his parents, and has decided that he is going to parlay some of his poker bankroll into a mortgage. By owning an apartment instead of renting or living at home, this player will be building up equity with each monthly mortgage payment, plus he will have something tangible to show for all of his hours spent playing online.
The big question now becomes: can this player get approved for a mortgage, considering their source of income and relatively young age?
The good news is that it is possible for this person to be approved for a mortgage. The bad news is that banks have tightened their lending standards in the wake of the subprime mortgage collapse, and it will take a little more effort to receive an approval.
There are certain steps that you will have to take if you want to give yourself a chance of being approved for a mortgage, if your story is similar to the one that we mentioned above.
1. Pull your credit history. Do you have any outstanding collection notices? Are there any errors in your credit history? The first thing that a bank is going to do is pull your credit history. If you have any outstanding debts that have moved to collection, your first step is to contact the collection agency to try and settle any outstanding debts. Find out how much it will take to settle, and then make sure that you get a letter from them stating that you have taken care of the outstanding debt. Your first step is to clean up your credit record as best as you can. If you have any outstanding loans or credit card balances, make sure that you stay up to date with your payments. This is important.
2. Make sure that you are up to date in your tax filings. If you have never filed or have never reported your poker earnings, then get an accountant, and fast. You will have to pay outstanding taxes and penalties, but you will help avoid a potentially ugly audit down the road. Besides, you will need a history of income in order to get a mortgage. Most banks will require two years worth of income tax statements that show your income. You may balk at paying for an accountant, but it will be well worth it. You need some sort of record of your earnings for a bank to approve you for a mortgage. Also, a bank will very likely ask for a verification of how you generate your income, so a letter from your accountant may become necessary. Again, hiring an accountant is a very worthwhile expense and is not that much money at all considering
3. Make note of any assets that you have. Cars, cash, investments, etc. Banks will also use this information in order to determine whether you would be an acceptable credit risk. It all helps.
4. Figure out how much of your bankroll you could use for a mortgage payment. Keep in mind that you will very likely have to put down a 25% down payment in order to be approved for a mortgage, considering your source of online and age. If you can't afford a 25% down payment, then you are likely to have troubles securing a mortgage, especially in this current lending environment.
Your first step should be making an appointment at the bank with which you have most of your bank accounts and loans. Come prepared with all of the information that I have outlined above - it will streamline the process and show the bank that you are serious about obtaining a mortgage. Or, you might want to try a mortgage broker.
Now what happens if the bank rejects you?
The first step is to ask them straight-up what you could do to improve your chances of getting a mortgage. They will likely say that you will either need to increase your down payment or get a co-signer for the mortgage.
If you can't increase the amount of your down payment then asking your parents to co-sign is not a bad idea. If you think that your parents might be skeptical or if they don't really approve of you playing poker for a living, then sit down with them and present them with the same information that you presented the bank. Show them your tax returns, your list of assets and the amount of the down payment that you are prepared to put down. Don't just walk in and say "I need a co-signer". Show them that you are taking this seriously, and I guarantee that you will have a better chance of having them co-sign.
For a young person with a sizable poker bankroll, buying an apartment or house is a pretty wise financial decision. Make sure that you buy a place in which you are comfortable and could see yourself living for a long time. The real estate market is in turmoil right now, so you should be able to find a decent deal. Don't just jump at the first place that you see; shop around and make sure that you try to bargain for a lower price. Many real estate markets in the US and around the world are currently quite bad and many properties have been sitting for sale for a long time, so use this to your advantage. If you do your research and find a nice place that you could see yourself living in for the long-term, then the short-term fluctuations in the real estate market won't really matter to you.
If you are a young, professional poker player, getting a mortgage can be quite difficult but it definitely is possible. Be persistent.
Filed Under: Miscellaneous Poker Articles
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