The Benefits of Bank Statement Loans
From people who own their own businesses to freelancers and gig economy workers of all shades, there are lots of folks out there with non-traditional incomes. There’s one thing these diverse individuals share in common: they often don’t exactly fit the conventional mortgage financing mold. In many cases they can benefit from bank statement loans.
Tailored to the Trend of Self-Employment
Working for yourself is a rising trend that’s on track to dominate. Currently, about 60 million people in the United States are self-employed, and that number is growing; in about five years, the self-employed will probably be the largest group of workers in America. These millions of people often don’t have pay stubs or W-2s that meet the traditional criteria for conventional mortgages. But they are earning and they do have money in the bank — perfect for bank statement loans.
Debt Doesn’t Necessarily Disqualify
Considerable debt doesn’t automatically mean that a borrower is a big risk for a lender. For example, when faced with a choice of investing or paying off debt, some savvy people choose investments. They may earn a greater percentage on an investment than the interest they are paying on a loan, and see tax advantages from borrowing as well. And so potential borrowers who are carrying higher than usual debt may still qualify for bank statement loans. You can stress to clients that unlike many loan products, which require the borrower to have a debt-to-income (DTI) ratio of 43% and under, bank statement loans often allow for a higher DTI.
Refinancing to Meet Changing Needs
Even before the coronavirus prompted a major shift in the American workforce, this was a common scenario: someone who had a salaried job when they initially got their mortgage loan has since left the workforce to strike out on their own. Or now earns with another form of non-traditional income. Brokers can stress that one doesn’t need conventional refinancing for an initial conventional loan. Bank statement refinancing are often an excellent choice for homeowners who have left the daily grind behind.
A Smart Way to Invest
If you’ve got clients who invest in real estate, they might consider using bank statement loans to purchase investment properties. Unlike some other mortgage financing, the borrower doesn’t need to live at the property in order to get approved for a bank statement loan. And why stop at one? Multiple financed properties are allowed under the rules of the road for bank statement loans. Wonderfully versatile, bank statement loans can be used for primary residences, second homes, and investment properties.
Like to learn more about bank statement loans and other financing options in the Simple Access® suite of Non-QM products from Luxury Mortgage Wholesale? Contact us to talk about your Non-QM lending needs.