As the name indicates, a bank statement loan uses alternative methods to qualify your mortgage approval by relying on your banking records. It is an ideal service for someone who owns his or her own business or who is self-employed. They rely less on tax returns and conventional means to prove your ability to repay the loan. Ransom Kelly at Assurance Financial is here to help you better understand bank statement loans. Feel free to contact our Birmingham, Alabama offices to see whether this type of mortgage may be a match.
Using a Bank Statement Loan
If you are considering a bank statement loan, then meet with your accountant about what documentation you will need. All of your assets should be well documented. Ensure they have records from all financial institutions for your personal or business accounts. While these statements may be a large part of the application, there will be other factors to consider.
Getting Approved for a Bank Statement Loan
In addition to reviewing your accounts and assets, a lender will look at other issues in your personal history. They may want to see a larger down payment available for the home, especially if you are asking for a large mortgage. Many want to see at least 20% down payment. A credit score of 680 or above is usually desirable. Your tax statements will still be reviewed, however, you may need to offer extra documentation to show your financial strength in business. This is one way to project the income you will have to repay the loan.
Other Reasons People Use Bank Statement Loans
Often times, people who enjoy real estate investment will use bank statement loans. This type of mortgage is common among those who own more than one property. You might gain more properties and raise your assets using this method. For example, you may purchase a second property, just to re-sell it and increase your profits. Other people simply will not qualify for traditional loans. For example, they may work off commissions or seasonal income. Being able to show many months’ worth of bank statements is a great way to prove your ability to gain income and repay debts.
Other people that use bank statement loans are retired and need to show their income through their 401K and investments. Many times, banks will want to see you have many years’ worth of income coming from these accounts. You can get an adjustable or fixed-rate mortgage with an array of loan terms in a bank statement loan. Ransom Kelly at Assurance Financial enjoys helping this non-traditional group of buyers. Visit our website to learn more, play with investment tools, or speak to our staff directly by calling our Birmingham, Alabama office.