The self employed face is a logistical obstacle when applying for a mortgage. They deduct business expenses on their tax returns in order to have a low net income, which saves them money at tax time, but their mortgage lender uses that net income figure to determine their annual income. The bookkeeping discrepancy can make the self employed borrower appear to have a low income and high expenses, even if the situation is just the opposite. Sometimes, the best option for the borrower is to take an adjustable rate loan and then plan a self employed mortgage refinance for the future.The best candidates for a self employed mortgage have great credit, little consumer debt, two or three years of audited financial records, and cash to use for a down payment. There are, however, many cases in which all of these stars do not align. Self employed borrowers are considered high risk by lenders because their income can vary widely from month to month, and because income can’t be accurately estimated into the future. They may only qualify for an adjustable rate loan, or a high interest loan. Borrowers may choose to take the loan they qualify for, no matter the rate, and do a self employed mortgage refinance when they meet more of the lenders’ terms.When borrowers have low net income on their tax returns and can’t prove to the bank that their actual income is higher, they may be approved for a loan amount with a lower monthly payment than a wage earner with a comparable income. The borrower may choose to take fewer deductions over the next few years, in order to have a record of higher income, and then begin a self employed mortgage refinance to either qualify for a lower interest rate or a shorter term loan with a higher monthly payment. Of course, this option is for self employed borrowers who are confident that their income is higher than the bank determined.Planning ahead financially is important for the self employed, because of their variable monthly incomes. Budgeting ahead may be more difficult with an adjustable rate mortgage. Self employed mortgage refinance would be helpful in the case that it switched the borrower’s mortgage to a fixed rate, allowing for easier future planning. Over time, the self employed borrower may establish a relationship with his lender and bank, and prove that he can reliably make the monthly mortgage payments, thus allowing him to consider a fixed rate refinance.