Bank statement loans can create a path to mortgage financing when other options fall short. With high loan limits, reasonable downpayment requirements, and flexible application terms, these loans are ideal for many people, especially the self employed.
Here are seven reasons to use a bank statement loan for your next property purchase…
7 Reasons To Use a Bank Statement Loan
1. You are Self-Employed
These loans, above all else, are intended for self-employed individuals. If you run your own business, regardless of the industry or your specific tasks, you don’t have the traditional documents used for most mortgage applications. You probably don’t have typical weekly pay stubs, and you may not file a W2, the document for employees used for tax filings.
Without these documents, a mortgage application can be a little more complex. But using bank statement loans can help you overcome this challenge. Bank statement loans, as the name implies, use your bank statement information to verify and confirm your income, savings, expenses, and other financial information. In many ways, this can create a more complete picture of your overall monetary situation.
If you are self-employed, you should at least look into a bank statement loan.
2. You are Retired
Bank statement loans, while often tailored for working professionals with inconsistent or unique incomes, are also good options for retirees. Retired individuals and couples often have a high net worth; they may have a small income that comes from investments and pensions, but, compared to their working years, the income is relatively minor.
But these retirees often have a high net worth. With savings, investments, and properties, these people can be worth millions of dollars despite having little or no income. This makes getting a mortgage, such as a loan for a vacation home, a challenge. Bank statement loans, however, can help retirees secure a loan.
3. You Need a Large Loan (Up to $10 Million!)
If you work with our team, you may secure financing up to $10 million for your next purchase. While not all applicants will qualify for this massive amount, this high level of jumbo-loan financing could help you purchase one of the finest homes in San Diego County, California, or, for that matter, anywhere in the nation where these loans are available.
If you are looking into a high-end luxury estate, a property on the ocean coast, or a massive property with hundreds of acres, the bank statement loan may provide the financing you need when other options fall short.
4. You Want a Reasonable Downpayment on a Large Loan
Many loans of this size, many non-typical mortgages, require a large downpayment. For a variety of reasons (including the lack of government backing), these loans require downpayments upwards of 20%, sometimes as high as 25% or more.
With these bank statement loans, however, you may be able to secure financing with only a 15% downpayment. 15%, to be fair, is still a large percentage, but it’s far more reasonable compared to many other non-QM loans. (For “non-Qualifying Mortgage,” a loose category of unique and different mortgages.)
5. A Low Monthly Payment is a Priority
One of the best reasons to use a bank statement loan is that the mortgage can be structured to deliver a low downpayment compared to other options, even when the loan total is high.
One of the ways this is achieved is through a 40-year term. In total, a 40-year term is more expensive than a 15-year or the common 30-year mortgage. However, a 40-year term can result in a lower monthly payment, freeing your money for investments or to simply enjoy your lifestyle.
You could also do an interest-only loan, which allows you to make lower monthly payments at the beginning of the mortgage. (But again, it can bring a higher total if you keep the loan to completion.)
The differences between a traditional 30-year fixed-rate loan and an interest-only payment can be impressive. For example, a $500,000 loan with a 3.125% interest would result in a monthly payment of roughly $2,800. A 30-year interest-only loan, however, would bring an initial monthly payment of about $1,900. While the payment will eventually go up, you’re looking at an initial payment that is almost $900 less for the starting period of the loan.
6. You Don’t Have Excellent Credit
Non-QM mortgages often have high credit requirements. But because your income and overall financial profile can be verified through bank statements, the credit requirements can be more lenient. In fact, with these loans you may be able to secure financing with a credit score as low as 620.
620 is considered a “fair” credit score. Not “good” or “very good” or even “exceptional.” Just fair. While many borrowers will have trouble securing financing with other products because of their credit scores, these bank statement loans can provide the mortgage you need even if your score is not “exceptional.”
7. You Need to Use a Co-Borrower
Many people experience challenges with their loan application. Perhaps their income is not high enough, their debts are too large, or their credit score is low. Either way, a co-borrower can be used to supplement the application and possibly reach final approval.
These loans allow you to use a co-borrower as long as that person is not self-employed. You can use full documentation of their income to increase your chances of good terms on your mortgage. This is one of the best reasons to use a bank statement loan, and it’s also a good way to increase your potential borrowing power.
Work with an Expert to Find the Right Mortgage for Your Situation
Want more information about bank statement loans? Need help finding the right mortgage loan for your unique situation? With a deep knowledge of the industry and years of experience, we can find the right loan to fit your specific needs!
Contact our team today and let us help with your application.