A bank statement loan in North Palm Beach is a loan that is based on the borrower’s bank statements instead of their tax returns. This loan is typically used by self-employed borrowers who may have difficulty qualifying for a traditional loan.
Bank statement loans have replaced conventional stated income loans for borrowers unable to establish their income using the typical way by producing the past two years’ tax returns, W2s, and pay stubs.
Because they provide other methods of determining repayment capacity, these loans fall under the non-QM, non-traditional, or loans with broadened criteria categories. The borrower may submit their bank statements as evidence of income when applying for a bank statement loan.
The following client types have their North Palm Beach bank statement loans used as loan collateral:
- Company Owners
- Contract Professional Consultants
- Independent Businesses
- Gig Economy Employees
These loans resolve the problem of borrowers utilizing the net income listed on their tax returns rather than their actual net income.
As a result, many potential borrowers are denied credit. By submitting to the mortgage lender as few as 12 months’ worth of bank statements that reflect monthly contributions, the self-employed borrower may apply for a bank statement loan. This aids the lender in figuring out the biggest loan amount you qualify for.
After that, the lender will either get in touch with your bank to authenticate your bank statements or fill out a request form for verification of deposit (VOD) and mail or fax it to your bank.
The lender will still want proof of the costs you incur from having a business if you use your company bank statements to qualify, but they won’t punish you if you’ve already claimed those costs as a tax deduction.
Benefits of a Bank Statement Loan
The benefits of a bank statement loan are as follows:
Lenders are not required to review tax returns and transcripts.
The consistent monthly income deposits are seen on your income statements.
- Lenders may review the previous 12 or 24 months’ bank statements.
- If you are a company owner, you may be asked to provide a P&L statement for the same time frame as well as 24 months’ worth of financial records. An accountant who is certified as a public accountant creates a profit and loss statement (CPA). It won’t be necessary for every business owner to submit one.
- A bank statement mortgage requires a 10% down payment.
- A cash-out refinancing loan for up to 85% of the value of your home is conceivable.
- The maximum loan amount is $5 million.
- Lenders who accept bank statements often allow debt-to-income ratios no higher than 55%.
- You can choose between a fixed-rate and an adjustable-rate mortgage.
- You might be able to get a mortgage with interest-only payments.
Possible Mortgage Issues Per a Bank Statement
Bank statement house loans provide various sorts of borrowers with greater flexibility and specific opportunities, but they are not appropriate for everyone. The following are some disadvantages that specific borrowers may experience:
The demand for documentation of two years of self-employment is a downside for self-employed borrowers; if you haven’t quite achieved that milestone, you’re out of luck and will have to wait.
Compared to more traditional loan alternatives, you could also have to deal with higher interest rates and down payments; however, this will undoubtedly rely on your credit score and general financial situation.
A bank statement loan is an example of a non-QM loan free from the same regulations as conventional mortgages. This implies that mortgage lenders’ eligibility requirements are adjustable.
Small company operators and self-employed individuals frequently use a bank statement loan. For borrowers who do not have traditional sources of income or have trouble being approved for a conventional loan, bank statement loans might be a practical choice. To know more about bank statement loans, you can also contact a mortgage company in North Palm Beach.
Contact Your Mortgage Specialist in Florida!
We at America’s Mortgage Solutions are committed to making sure the process of buying a house or refinancing an existing one in North Palm Beach, Florida, is simple, easy, and stress-free. If you need a bank statement loan in North Palm Beach, contact us at (561) 316-6800 today!