A bank statement mortgage loan is a type of home loan that requires you to have a checking account with sufficient funds to cover the monthly payments. Continue reading to learn more about available bank statement loans in Los Angeles.
What is a Bank Statement Loan?
A bank statement loan uses the borrower’s bank statements to verify income instead of traditional W-2s or tax returns. They are a newer alternative to stated income loans, which became subject to stricter restrictions after the mortgage crisis in 2008. Bank statement loans use a more thorough proof of income, so they are considered lower risk than these loans and can come with better interest rates.
Who Should Consider a Bank Statement Loan?
Bank statement loans can be a great option for self-employed workers, freelancers, independent contractors or anyone else who earns their income outside of the traditional W-2 employment structure. Self-employed workers can often find themselves in a situation in which their deductible business expenses make their reported income on their tax returns appear lower than it really is and impact the size of mortgage they can qualify for. Bank statement loans allow independent contractors to apply for a mortgage using their entire income.
What Are the Requirements for a Bank Statement Loan in Los Angeles?
To get a bank statement loan, borrowers generally need between 12 and 24 months of statements. Providing two years worth of statements will generally qualify borrowers for better rates. Borrowers may also benefit from providing business rather than personal bank account statements, as well as profit and loss statements.
What Type of Mortgages Can Bank Statement Loans Be Used For?
Bank statement loans are an available option for borrowers purchasing most types of property. In addition to mortgages for first-time homebuyers, they can be used for second homes, vacation homes and investment properties. They can also be used for refinancing. However, they cannot be used for FHA loans .
What Are the Downsides of Bank Statement Loans?
While they are an excellent option for self-employed borrowers, bank statement loans are still considered higher risk than traditional mortgages, and therefore can come with higher interest rates, higher down payment requirements and higher minimum credit score requirements. Bank statement loans are becoming more popular, but many lenders still do not offer them, so borrowers may find that their lender choices are more limited than with traditional mortgages .
What Are Today’s Rates for Bank Statement Mortgages in Los Angeles?
Bank statement mortgages can be an excellent option for certain borrowers. Advanced Funding Solutions’ lending professionals can advise you on whether this type of loan is right for you and what rates are available. Contact Advanced Funding Solutions, Inc to get a personalized quote .