As you go through the process of buying a home, specifically finding the right financing option for you, anything that sounds unconventional may have you feeling cautious, such as a bank statement loan. We know that some things sound too good to be true, and if you have already been turned down for conventional mortgages you may be feeling discouraged. The good news is, we have an option that is not too good to be true, a bank statement loan!
If you are someone who can afford the down payment and monthly mortgage, but can’t verify income with tax returns that are required for most mortgage applications, there is another option that might be the perfect fit: a bank statement mortgage.
What is a bank statement mortgage?
Bank statement loans have emerged as an alternative financing option for individuals who may not meet traditional lending criteria, such as those with irregular income streams or self-employed individuals. A bank statement loan works very much like a conventional mortgage, but the application process involves simply looking at bank statements from the past 12 to 24 months to verify your eligibly rather than tax returns. These are ideal for people who are not able to verify their income in the traditional ways, but do have sufficient income to take on a mortgage.
Are there any risks or downsides with a bank statement mortgage?
Are you waiting for the catch? There really isn’t one. You won’t see any hidden costs in the mortgage or major consequences a few years from now. The best thing you can do is apply for a bank statement mortgage and see the rates and terms for yourself.
Bank statement mortgages do sometimes require a higher down payment or have a higher interest rate than an FHA or conventional mortgage, but don’t assume it will be out of your price range until you apply and see the numbers. We think you will be pleasantly surprised.
Why is a bank statement mortgage the right choice for some borrowers?
A bank statement mortgage is the perfect fit for many of our clients. It’s the right choice if benefits like these are what you need.
Flexible Income Documentation
The primary advantage of bank statement loans is the flexibility they offer in terms of income documentation. Unlike traditional mortgages that rely on tax returns and W-2 forms, bank statement loans consider bank statements, providing a viable option for self-employed individuals or those with variable income. This flexibility allows a broader range of borrowers to access mortgage financing.
Faster Timelines
Bank statement loans often have a faster approval process compared to traditional mortgages. Since they rely on bank statements and other financial documents, rather than extensive income verification, the application and approval process can be expedited.
Solution for Credit Challenges
For borrowers with credit challenges or a less-than-ideal credit history, bank statement loans can serve as a bridge to homeownership. While interest rates may be higher, securing a mortgage through this avenue allows individuals to establish or rebuild their credit, with the potential to refinance to more favorable terms in the future.
Opportunity for Self-Employed Borrowers
Self-employed individuals often face challenges when trying to secure traditional mortgages due to the variability of their income. Bank statement loans provide a valuable solution for entrepreneurs and freelancers who may have a steady income but lack the typical documentation required by conventional lenders.
Where can I get a bank statement mortgage in California?
This is where we come in! We have many years of experience helping our clients find the mortgage that is the right fit for their unique needs. We were one of the first lenders to offer this type of loan, and we love to provide our clients with the solutions they need.
If you think you are ready to buy a home, we want to work with you to find the creative financing solutions that help you reach your goals. Contact us any time to learn more about applying for a bank statement mortgage.
