To grant the home loan, the mortgage providers check the borrower’s source of income. Typically, verification is done based on W2 tax forms. However, this can create a problem if you work as a freelance professional, such as a freelancer. The reason is that the self-employed, landlords, gig workers, and contractors don’t have the tax forms to file. This is where bank statement mortgages come into play.
Here how it works. All you have to do is prove your source of income by submitting your data for a year or two. Read on to find out more.
What is a mortgage?
With a bank statement mortgage, the lender can verify your income with the help of bank statements rather than tax forms. Conventional mortgage loans require borrowers to submit their tax returns, for example, for verification purposes.
On the other hand, mortgage applicants can opt for a loan statement.
Who should go 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
Self-employed or temporary workers
Types of bank statement loans
Depending on your situation and the lender, you can choose from different programs. Although most lenders require a minimum of one year of data, some may not require a lot of detail. However, if you provide two years of data, you can negotiate better terms and prices.
Now, if you do not have a valid business statement to submit, there is another option: you can submit a personal statement. For the purpose of qualification, they can use a small percentage of your deposit.
Sometimes, you may be required to submit a profit and loss statement for your business in order to obtain a loan.
How can you get a real estate bank account statement?
Bank statement mortgages typically fall into the category of “nonqualified mortgages.” The reason is that they do not meet the standards of traditional lending. Not all lenders offer these mortgages. As a matter of fact, many credit unions and banks do not offer these loans.
In this case, you should look for a lender who specializes in mortgage lending. Also, if you don’t qualify for traditional mortgage financing, you can contact several lenders to see if they can take statements for this service.
Don’t forget to ask about business and personal data requirements. This will include questions about the statement period as well. Other important questions can be about interest rates and payment requirements.
What are the mortgage rates?
If you are a self-employed, seasonal income earner, consultant, freelancer, tax preparer, or artist, you can apply for a statement loan to meet your needs.
As far as interest rates are concerned, down payment requirements vary based on the lender. So, you better shop around for the best deal.