To grant a mortgage loan, mortgage providers verify the borrower’s source of income. Verification is usually done based on W2 tax forms. However, this can create a problem if you work as a freelancer, such as a freelancer. The reason is that the self-employed, homeowners, freelancers and contractors do not have the tax forms to file. This is where bank statement mortgages come into play.
Is that how it works. All you need to do is prove your source of income by filing your returns for a year or two. Keep reading to know more.
What is a bank statement mortgage?
With a bank statement mortgage, the lender can verify your income with the help of bank statements instead of tax forms. Conventional home loans require borrowers to submit their tax returns, for example, for verification purposes.
Mortgage applicants, on the other hand, can opt for a loan statement.
Who should opt for a Bank Statement Loan?
If you fall into any of the following categories, you can use your bank statement to apply for a mortgage.
People with irregular income streams
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Self-employed or commissioned workers
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People with seasonal income
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independent contractors
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self-employed applicants
Types of bank statement loans
Depending on your situation and the lender, you can choose from different programs. Although most lenders require at least a year’s worth of statements, some may not require as many details. However, if you submit 2 years of statements, you can negotiate better terms and rates.
Now, if you don’t have a valid business return to file, there is another option: you can file a personal return. For qualification purposes, they may use a small proportion of your deposits.
Sometimes you may need to file a profit and loss statement for your business to get a loan.
How can you get a bank statement mortgage?
Bank statement mortgages generally fall into the category of “non-qualified mortgages.” The reason is that they do not meet traditional lending standards. Not all lenders offer these mortgages. In fact, many credit unions and banks do not offer these loans.
In this case, you should look for a lender that specializes in home loans. Also, if you can’t qualify for conventional mortgage financing, you can contact many lenders to find out if they can take statements for this service.
Don’t forget to ask about the requirements for business and personal statements. This will also include questions about the statement period. Other important questions could be about interest rates and payment requirements.
What are Mortgage Rates?
If you are self-employed, have seasonal income, are a consultant, self-employed, prepare tax returns or are an artist, you can apply for a statement loan that meets your needs.
When it comes to interest rates, the down payment requirements are different depending on the lender. Therefore, it is better that you shop around to get the best deal.