To grant a home 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 freelancers, owners, workers and contractors do not have the tax forms to file. This is where bank statement mortgages play their part.
Is that how it works. All you need to do is prove your source of income by submitting your one- or two-year statements. 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 apply 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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Freelancers or concert 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 ask for at least one year of disclosures, some may not require as much detail. However, if you file 2 years of returns, 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 can use a small proportion of their deposits.
Sometimes you may need to file a profit and loss statement for your business to acquire a loan.
How can you get a mortgage with a bank statement?
Generally, bank statement mortgages fall under the category of “unqualified mortgages.” The reason is that they do not meet traditional loan 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 who 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.
Be sure to ask about the requirements for business and personal disclosures. This will also include questions about the statement period. Other important questions could be interest rates and payment requirements.
What are the mortgage rates?
If you are self-employed, earning seasonal income, consultant, freelancer, tax preparer, or artist, you can apply for a statement loan to meet your needs.
When it comes to interest rates, the down payment requirements are different depending on the lender. So, you’d better shop around to get the best deal.
