Introduction: “Welcome to the Ask The Expert show on W4CY radio and talk for TV, where we bring you educational information from top local experts in the fields of Legal, Health, Financial and Home Improvement. Now sit back and listen to experts in Family Law Association, Finance, Business Brokers… along with many other topics.”
“Now here’s your host, Steve O.”
Steve O: “Hey good afternoon… welcome to another “Ask the Experts” where we bring you the finest experts in the areas of Finance, Health, Legal and Home Improvement.
I’m telling you today, I’m so excited, I should like pat myself on the back because you’ve been asking for us to have a mortgage lender on our show.
That expert, which is not easy to find, but I’m going to tell you something… we found one of the top mortgage lenders in the state of California, we are so blessed.
Let me welcome you to Jackie Barikhan with Summit Lending… I know very little about mortgages I could never be an expert like you. I know the mortgage business isn’t so great right now, with what’s happening to interest rates, but you know what, we got the best and we’re going to educate people and you know what we want people to do, is if you’re buying a home, looking to refinance to pull some cash out, we brought you the best, so when we give you Jackie’s phone number, write it down and keep it. Jackie tell everybody about your company.”
Jackie Barikhan: “Thanks Steve.. I’ve been in the industry for over 25 years, so I’ve been around a little 😊, which is experience right!”
“Our company offers all the traditional loan programs.. for instance… Conventional loans, FHA loans, Jumbo loans, VA loans as well as Bank Statement loans for self-employed people.
We love helping our clients with all these various types of loans and have been super busy in the last few years, as you can imagine, when we had interest rates in the 2’s!
The last year or so, has been a little bit more challenging with interest rates creeping up…current rates probably close to the 7’s at this point. (May 2023)
We’re hoping they come down… we’re following the economists and thinking somewhere in the next six months to a year, we’re going see better rates, but there’s still opportunities out there for people looking to purchase a home or take cash out, if they need it.”
Steve O: “Oh that’s really great to hear. Well we’re going to jump right into the show because I’ve got so many questions for you… first, what is a bank statement loan and how is it different from like a traditional mortgage loan?”
Jackie Barikhan: “I love that you asked me that question, that’s probably my favorite type of mortgage loan. Thank you for asking that question and I’m so glad to be here.”
“Bank statement loans … a simple way to put it, it’s just another way to prove your income.”
“For people who are self-employed.. Examples: small and large business owners, contractors, electricians, plumbers, lawyers, doctors, financial planners, Realtors, you name it…. Truckers, we’ve worked with hundreds and hundreds of people that own their own business, helping them get a home loan when they thought they couldn’t qualify.”
“Sometimes when you have a good CPA, we’ll just put it this way… your CPA finds ways to save you money on your taxes, so the bottom line net number on your tax return, doesn’t always reflect exactly what you really make. You pay less money in taxes that way.
So that’s how the bank statement loans came into play.”
“About six years ago, we started with a group of small independent banks and credit unions and helped them write guidelines of how a bank statement loan would serve a whole sector of society, that can’t get traditional home loans, because of their tax returns, or they just don’t have W-2’s and paystubs of a typical borrower.”
“Bank Statement Loans are a little more creative. The borrowers prove they can pay their bills, but they just can’t show it with the traditional methods. (ie: tax returns)
We were one of the first lenders out of the gate with this type of loan. We really love it and we’re experts it.
It is a new way of calculating income…. if you could size up the entire mortgage industry in three words… “ABILITY TO REPAY”… that’s it!
That’s what we want to know: How can we get our money back, if we’re going to loan you money?”
“On a bank statement loan, we can see the cash flow of your business, we can see the money flowing through your bank account, if you own a business.
Now depending on the type of business you own, the lenders are going to create an expense ratio for you, but it’s probably going to be a lot less, than what we would see if we looked at your tax returns. Tax returns aren’t even part of the equation, we don’t even need to look at them. No Tax returns required. It’s strictly bank statements that prove the income, does that make sense?”
Steve O: “Oh absolutely… I’m looking down at my phone, because we’re getting texts from viewers right now, there’s one of these questions, but this one I’ve got to ask you because you’re hearing about it in the news, he wants to know he keeps hearing the President talk about making loans easier for people with bad credit and harder for people with good credit?”
Jackie Barikhan: “You can’t always believe everything that you see on the news Steve… you know these days, we’ve got some crazy stuff happening in our world, which is a whole other topic for another day, but I would say, you know common sense thinking rules, are the most important. Using bank statement loans, it’s all about common sense thinking.
We look at credit, we look at income we can see on the bank statements, we look at how well you’ve paid other people back in the past, we look to see that you have a little bit of skin in the game, so you got to have some down payment money.”
“At the end of the day, if you have a 500 credit score and no down payment, you probably shouldn’t be buying a house… it just, you know… you need to show some responsibility, and so that’s my two cents on that.”
Steve O: “What are eligibility requirements for obtaining a bank statement loan? Are they specific to income or credit score criteria?”
Jackie Barikhan: “Well it’s very similar to any other type of loan that’s out there, obviously credit is important, the higher your credit score, the better your interest rates, and the lower your down payment amount.”
“I’ll give you an example… let’s say you’ve got a 700 credit score. On a bank statement loan, you can put as little as 10% down to purchase a home. If your scores are in the 650 range, you’re probably going to need to put 15% down or 20% percent down, if you a looking to become a home owner.”
“Let’s give another example, if you currently own a home and you were looking to pull some cash out for home improvement or say additional capital for your business.
The eligibility requirements would be looking at credit score, to determine how much cash out you can take.. typically up to 75% to 80% of the home’s value.
The debt to income ratios for a bank statement loan are typically between 43-50%.”
Steve O: “I’m very curious are people’s credit scores any worse now with the economy… or is it still basically about the same?”
Jackie Barikhan: “Steve, I would say that the majority of people we work with, have credit scores in the high 600 to the high 700’s. Every once in a blue moon, we will see an 800+ pop up, but you know the average person is right in that range. Credit scores are an indication of what’s happening in your life. I am seeing sometimes a little more debt people are carrying, which will cause your credit scores to go down a little bit… right… so that’s the world that we live in now, but you know… so far, we’re not seeing many defaults yet, so that’s good…. not in the mortgage space.”
Steve O: “Okay that’s good to hear, I guess I worry a lot about that when I see what’s going on with the economy. All you have to do is go into a grocery store or a gas station or whatever, and then you know we’ve got this problem with the ceiling debt. I’m curious if you know with the way the debt is right now, is it any different, but it doesn’t really sound like it is…”
Jackie Barikhan: “Well I think a lot of it has to do with where you’re at in the country too, I mean… here in Orange County, California, where I’m at… it feels like a little bubble here, you know we’re just like sunshine, happy days. Everything seems to be kind of normal around here and people are still going out to eat, people are still going to the movies, buying cars, taking vacations. There’s still plenty of business that’s happening… but you know we drove up to Los Angeles a couple months ago, and it was a different world up there in certain areas, not what I’m used to seeing when I go to LA, and it was kind of sad.”
Steve O : “Yeah I have friends in Newport Beach and I totally agree, it’s like they say “what are you talking about, we don’t have that here”. We’ll see what happens with the debt ceiling, we’ll see interesting times ahead. So about lenders again, how do lenders evaluate income and employment stability for a bank statement loan, considering that traditional income verification methods like a W-2 might not be available?”
Jackie Barikhan : “Well again the bank statement loans are looking at the income we can see, using the bank statements as income, so tax returns are not required. No W-2s or K1’s either. Stability of the business is looked at, by length of time the business has been in business.”
“I’ll give you an example, say for instance.. we use your bank statements to prove your income. We can look at it a couple of different ways: you can use 12 months of bank statements, which would be the most recent 12 months, or we can request a further look back period, which would be 24 months or two years. Sometimes with the 24 month look back period, you’ll get a little bit better interest rate, because it shows more stability and that sort of thing.”
“Let’s talk about what happened in 2020 and 2021, there were a lot of small businesses that suffered, so we wouldn’t probably want to look back for 24 months with that business.”
“A better way to qualify, would be to look at just the most recent 12 months on their bank statements, and as long as we can see that business is back up again, things are rolling along, and they’re making money again, then we would want to see that, to show the real income that business would be generating to be able to pay that loan back.”
Steve O : “So are you are you still doing business by Zoom?”
Jackie Barikhan: “We do everything by phone. Every once in a while we go out to meet our clients. The nice thing about Zoom, I think everybody learned, is we can be a lot more efficient.. you know than having to get up and go out and drive to meetings and sit there for two hours, we can get everything done right here… right now, just like we’re doing today, which is awesome.”
Steve O: “Okay on the line… here’s Kathy in … Newport Beach…She about wants to know the different types of loans available out there?”
Jackie Barikhan: “Early in a loan officers career, we all learn about basic conventional loans which traditionally are for people with good credit and a stable job history, nice down payment.
Then we have our first time home buyers… maybe the income is a little tight or a smaller down payment.. these are usually great candidates for the FHA loan programs, which will allow a down payment as low as 3½% down and allow up to a 50% debt to income ratio vs. the 43% maximum debt ratio allowed for conventional loans.”
“If you are Veteran and we love our Veterans! We have the best loan programs for them, with the very best interest rates and No Money down! They deserve it, for how they serve our beautiful country.”
“Now each of these programs that I mentioned, all require a 2 year history of tax returns, and the lenders and underwriting guidelines, are going to use the bottom line net number they can see on the tax return… For example, generally speaking, if you made $150,000 a year in income and you had $50,000 in write offs, your net number, is generally going to be around $100,000. The underwriter would use that income to calculate towards whatever type of loan you are getting. So if you’ve had your job a long time, and you receive a W2 and regular paystubs, any of these loans can work for you.”
“The bank statement loans are the new game in town, and they are a perfect choice, if you are self-employed borrower.”
“For investors we have excellent common sense thinking loan products that base the calculations on the amount of rent that is received on the rental property.”
“We also have a new program that is equity based, that doesn’t require any income documentation, but rates are a bit higher for that…. Risk based…”
“I’ll give you a little story as an example of how the different programs can be used to your advantage… I had a financial planner that came to me, he was in Newport Beach. He was looking to get pre-approved and purchase a home. So we looked at his tax returns, he was qualified and we are able to issue him a pre-approval letter and his pre-approval letter was for about 1.2 million and he had 20 percent to put as a down payment. That would have absolutely fit as a conventional loan, and it would have been great loan approval/ closing.
The problem… his wife found a home that she really liked that was like 2.1 million or something I’m trying to remember… nevertheless, it was a lot more than what his pre-approval letter was able to get him, using his tax returns… but when we looked at his bank statements, we could see the cash flow. We could see how much money he was really bringing in and again with bank statements, the lenders will use an expense factor, but it’s not necessarily the same aggressive way that your CPA does. Right!? Your CPA is like… yeah we can write off this, we can write off that… Right, yeah right! Your tax returns say you don’t make very much money… I have lots of doctors, attorneys, Realtors etc… that are very poor on their tax returns… so you get the point that the bank statement loans allow us to see the correct picture. Common sense thinking.. make sense thinking… comes into play.”
Steve O: “I want to let everybody know that we’re here talking to Jackie Barikhan and she is a mortgage lender with Summit Lending. Her phone number is 949- 600-0944
Steve O: “Jackie…. I want you to kind of go over this again, how does the interest rate and loan terms for a bank statement loan compared to a traditional mortgage loan?”
Jackie Barikhan: “That’s a great question, let’s talk about the investors that purchase these loans. Bank statement loans are purchased by your Wall Street investors, your insurance companies your hedge funds. These companies understand risk and reward. They know that these type of loans, because they don’t fit in the perfect box, like a conventional loan purchased by the government agencies like Fannie Mae and Freddie Mac. They feel they deserve to get paid a little higher return, but not too much higher.
Example: Remember when interest rates were in the 2’s last year? We had bank statement loans that were in the 3’s.
So on average… they’re about a point higher than a conventional loan, depending on credit score, depending on a few other factors.
Bank statements loans still make sense, because for some people they wouldn’t be able to even get a loan at all, if this program didn’t exist… except maybe hard money but those rates and terms are awful and who wants that!”
Steve O : “Yeah that’s true. You know it’s so important to have a really good mortgage lender. I’ve actually had people have told me that they didn’t like the way things were explained, didn’t make sense, but then again they didn’t ask questions either, they didn’t want to look foolish in front of the lender. I’ve got to tell you, just talking with you, you really know your business. So I’m going to ask you a question and I always like ending the interview…. why should I hire your company?”
Jackie Barikhan: “Thanks Steve .. you are right! Our industry IS complicated. I know loan officers out there and I remember when I first started, hearing all the acronyms and being confused and wondering what it all meant. That is not how I talk to my clients… I think people like to keep things simple. I do my best to make the process easy to understand. Honesty is important, I’m going to tell it to you as it is, and if it makes sense that the loan is going to benefit you, and help you, then we’re going to do the loan for you… and if it doesn’t make sense, then I’ll tell you that too.”
“I think that looking at our reviews online too… past client reviews are important. When you can go look at our five-star reviews online, I think that tells you a lot from the people that have worked with us in the past. If they liked us, knew we’re skilled at all types of loan products. 25+ years of closing all types of loan programs from conventional loans, all the way over to these bank statement loan products, which are our specialty. We really know and love our bank statement loan clients and that tends to be a major portion of my business. So if you were thinking about any type of home loan, I would love to talk to you…I’ll teach you and help you to understand all the details.”
Steve O: “I believe that now, you just cover the Los Angeles, Orange County area of California?”
Jackie Barikhan: “We serve our clients all over the entire state of California.”
Steve O: “Anywhere in California?… I am so glad to hear that, because somebody from the Bay Area just wanted to know if you cover that area…that’s wonderful.”
“The name of your company is Summit Lending. Jackie Barikhan 949-600-0944 or visit her website at www.mylenderJackie.com or book a call with Jackie now at www.talkwithJackie.com she’ll be more than happy to answer any of your questions, the great news is… she’s going to be back again with us next month.”
“Yes… I’ve got so many more questions Jackie. I’m so glad you’re part of our show.”
Jackie Barikhan: “Thank you so much for having me Steve, this was great & will see you next month… sounds great, thank you, thanks again.”