Bank statement loans have gained popularity as an alternative financing option, especially for self-employed individuals or those with non-traditional income sources. However, like any financial product, there are common misunderstandings and myths surrounding bank statement loans.
Whether you are about to apply for a bank statement loan or just want to learn more, keep reading for helping information to make the best decision for your unique needs, and feel free to contact us any time with your questions.
Myth: Bank Statement Loans Are Only for the Unemployed or Those with Poor Credit
One common misunderstanding is that bank statement loans are designed exclusively for individuals with unstable income or poor credit. In reality, these loans are often sought by self-employed individuals, freelancers, and business owners who have irregular income streams or difficulty providing traditional proof of income. Bank statement loans cater to those who may have a solid financial standing but lack the conventional documentation required by traditional mortgage lenders.
Myth: Bank Statement Loans Have Exorbitant Interest Rates
There’s a misconception that alternative financing options and non-QM mortgages in general, including bank statement loans, come with extremely high-interest rates. While it’s true that interest rates on these loans might be slightly higher than those on traditional mortgages, they are not necessarily exorbitant.
The rates are influenced by factors such as creditworthiness and down payment, and are often only a bit above a conventional mortgage. Before you assume the rate will be extreme, find out what you qualify for and let us surprise you.
Myth: Bank Statement Loans Are Riskier for Lenders, Resulting in Stricter Terms
Some believe that lenders view bank statement loans as riskier, leading to more stringent terms and conditions. While it’s true that these loans cater to a different risk profile compared to traditional mortgages, many lenders specialize in serving self-employed individuals and offer reasonable terms.
The key is to choose a lender experienced in dealing with bank statement loans, as they understand the unique financial situations of their borrowers. We have the experience required to understand your unique scenario. We know how to be creative and strategic in finding a solution that works for you.
Myth: Bank Statement Loans Have Unattainable Eligibility Criteria
Another common misunderstanding is that the eligibility criteria for bank statement loans are too strict, making it challenging for borrowers to qualify. In reality, while we do have specific requirements, these loans are designed to be more flexible than traditional mortgages.
We will consider factors such as your credit score, income stability, and overall financial health. With proper documentation and a reasonable financial profile, many individuals can qualify for a bank statement loan when they otherwise cannot qualify for a mortgage.
Myth: Bank Statement Loans Are a Temporary Trend
Some view bank statement loans as a passing trend or a product of the post-financial crisis era. However, these loans have proven to be a valuable solution for a growing segment of the population with non-traditional income sources. As the gig economy expands and more individuals embrace freelancing or entrepreneurship, the demand for alternative financing options like bank statement loans is likely to persist.
Myth: Bank Statement Loans Come with Hidden Fees and Charges
There’s a misconception that bank statement loans are laden with hidden fees and charges, making them less transparent than traditional mortgages. While it’s crucial for borrowers to carefully review loan terms and agreements, you can count on us to be transparent about fees and charges. As with any financial product, borrowers should ask questions and seek clarification to make sure you understand all of the terms. We are here to make sure you do.
Myth: Bank Statement Loans are Only for Business Owners
While bank statement loans are commonly associated with self-employed individuals and business owners, they are not exclusively reserved for this group. Freelancers, consultants, and individuals with various income sources can also benefit from these loans. We will assess the stability and consistency of income, regardless of whether it comes from a traditional job or self-employment.
Ready to learn more about applying for a bank statement loan? Contact us any time.
