Okay, so not an actual Emmy, but we think it’s the best solution for entrepreneurs looking to purchase a home!
There are many outstanding non-qualifying mortgages available to buyers. Known as “non-QM” products, they come in many forms, but the bank statement loan is the best.
Here’s why it’s the award winner for best non-QM product!
The Situation
To thoroughly describe a loan program, especially one as exceptional as a bank statement program, it helps to look at a hypothetical situation. This allows us to see the program in (hypothetical) action and gives us a better understanding for the unique uses for these loans.
Let’s imagine Nathan, a self-employed owner of an internet-based marketing company. Nathan works extremely hard and has built his small company into a thriving, active business that is endlessly busy. His company is earning strong revenues, and he is starting to enjoy steady profits from his company.
Nathan, while dedicated to his trade of internet marketing, is also interested in real estate investments. He understands that property can be a steady, income-generating, value-growing asset, and he wants to start investing in rental houses.
He does not own any properties yet, but he keeps an eye on the market just in case something comes up that would be right for his needs. Sitting at the kitchen table one morning, sipping coffee and browsing the local real estate listings, Nathan sees a new property on the market: a two-unit property right next to his.
Being new to property investments, Nathan thinks a nearby property would be perfect. He could monitor the property with ease, and could be available for anything the tenants need without having to drive across the metro area. He also knows that the property is well maintained (at least on the outside) and has constantly held a steady stream of tenants.
The home is also priced perfectly, and Nathan believes he could see strong cash flow if he were to make the purchase. He decides that his best option is to take equity out of his home with a cash-out refinance and use the proceeds for a downpayment and closing costs on the new purchase.
Thanks to a thriving business, his income is more than enough to make the purchase. But Nathan realizes that despite his strong earnings, he will experience a challenge when applying for a “typical” mortgage.
The Challenge
Unfortunately, Nathan does not claim enough income on his taxes to qualify for a traditional income-based mortgage loan. Federal income taxes allow for a variety of tax write-offs and other advantages that help business owners and job creators to reduce their total tax burden. These tax advantages are designed to encourage business ownership and job creation, and many business owners, as they should, use every advantage to reduce their tax liability.
But this means that a business owner’s federal tax documents, which are an important part of most loan programs, will not accurately reflect their total earnings. The tax documents will show a much lower income than the reality, which is why (among other reasons) many business owners struggle to secure a mortgage loan, even when their earnings are well above average.
Fortunately, there are solutions. Bank statement loans in particular win the award for best non-QM product, and they can be particularly useful when you want to secure a loan despite a smaller listed income on your tax returns.
The Solution: Bank Statement Loans
With bank statement loans, you use documents directly from bank accounts, such as checking and savings, to secure a mortgage. Instead of using traditional tax returns, the lender looks at your bank statements. These documents, in many ways, provide a more accurate picture of someone’s financial situation, especially if that someone is a self-employed business owner or investor.
Our Bank Statement Loans Create Access to High-Quality Purchases
With our bank statement loans, Nathan can secure a cash-out refinance as high as 70%. This gives him the option to use his current home as leverage for an investment purchase, and could potentially result in better interest rates and stronger terms on his investment purchase.
He can take advantage of interest-only terms, and loans over $4 million are available to qualifying borrowers. These loans come as a 30-year fixed-rate bank statement loan, and there can be a cash out of over $1.2 million. (For more details and a deeper explanation, contact our team!)
What is Required for Bank Statement Loans?
Each lender is different, and our bank statement program, which we described above, will have requirements and details that are unique to other options. However, you can expect a few consistent terms and requirements from almost all bank statement programs.
Obviously you’ll need to provide bank statements, but lenders will have different requirements for how much you need to provide. Most will require roughly 12 months of consecutive bank statements from the same account.
Many will have downpayment requirements, which could vary from 5% to as high as 20%. If you need a bank statement loan but are struggling with the downpayment, contact our team, as options are available.
Assuming you are self-employed, you’ll probably need to be in your career or industry for at least two years. If you only recently left your job to start a business, you’ll probably have to wait for a loan.
Regardless of your situation, we would love to talk with you about your mortgage needs. Bank statement loans are the best non-QM option available, so if you have a unique financial situation, let up help!
Don’t Hesitate; Our Bank Statement Program is Waiting!
Want to learn more about our fantastic bank statement program? Need a bank statement loan for an investment property or your primary home?
If you are a business owner or investor who has found difficulty getting approved for a mortgage, contact our team right away. With years of experience and numerous resources, we can find a mortgage loan that fits your specific needs, allowing you to purchase a world-class home, start an investment career, or expand your portfolio.
