I am local in Buffalo so please feel free to visit my website at http://www.anthonyrijos.com for my contact information and maybe we can sit down in my office to figure out a plan for you.
NMLSR ID 404090
Wells Fargo Home Mortgage
A few answers in response to your questions:
1. Self-Employed Income analysis: you must be self-employed three years. We will use the net income after expenses from your last 2 years tax returns, averaged over 24 months for qualifying purposes. If you have depreciation (for example on equipment) we will add that back to the bottom line calculation; same for "one time" expenses you can document as being one time. Self-Employed persons are no more risky than anyone else; it's the qualifying that's difficult because Self-Employed persons often write off a lot of expenses against income, thus lowering the qualifying income.
2. Your score isn't all that far off the mark: 640 is the score you need to qualify. My company will lend money to you with a score of 620, with stricter lending standards. Without seeing the report I can't guide you on how to raise the score, but a couple of neat tricks include paying down your balances to equal no more than 50% of your available limit on revolving debt; if the score is low because of derogatory item(s), then just the natural process of "aging" will raise the score as the bad stuff recedes into the past and your current accounts continue to be paid on time. Be sure you don't CLOSE any accounts; that's tantamount to having a collection account on your report. So, to your question of whether to wait, you might not have to if you qualify under the requirements for 620 score. If you don't, then you won't wait that long to get to a 640 score.
3. When you're shopping for a mortgage, inquiries on your credit report have NO effect on your score! This "hard inquiry" thing is a MYTH when it comes to mortgages.
4. The fact you've saved up that kind of money sounds like you may be financially conservative in your overall qualifying profile; that's a lot of cash. That's my guess based on 22 years as a Mortgage Banker here in New York.
5. I am a Licensed Mortgage Loan Originator working for a NYS Licensed Mortgage Banker. We're Direct Lenders and I'd be happy to prequalify you and answer your questions in more detail.
Proud Mortgage Banker Since 1989
Self employment is tougher, but with 2 years in you have lasted longer than most start up businesses. If your self employment is in the same line of work you were in previously it may be helpful. You'll have to apply with a lender to know for certain. They will look at all 3 credit scores and use your middle score for determining rate & programs.
Your income will be gone over with a fine tooth comb and they will likely average out the past two years to set your approved debt ratio and loan amount.
Improving your score may be possible as well. Some quick steps are to reduce any outstanding balances to 1/3 their credit limits. The more freed up credit you have the better it impacts your scores. Dispute with proof any derogatory information which may be inaccurate to each reporting company that has the inaccurate information. The higher you can get your scores, the better chance you'll have for approval and a great rate.