How a Bank Statement Loan Works When Buying a House
One of the steps that mortgage lenders take when assessing loan applications is income verification. Income verification tells the lender if the person has a job and the income they earn from it. When a person is self-employed, the income-verification process does not work the same, as there is no employer to contact. As a result, many self-employed individuals seek bank statement loans to buy homes.
What Is a Bank Statement Loan?
A bank statement loan is not a mortgage loan, but it is similar. A bank statement loan is a loan type that allows you to bypass the normal income verification process. During the typical income verification process, a lender checks with your employer to see if you work there and the amount of money you earn. If you work for yourself, a lender cannot verify your income through this method. Therefore, a bank statement loan is an alternative loan option for self-employed people. When you use this loan type, you offer your bank statements to the lender as a form of proof of income. The lender bases your loan decision on the information your bank statements reveal.
How Do Lenders Determine If You Qualify?
When you apply for a bank statement loan, the lender will look for several things. First, they want to find out if you have an established business, so they will ask how long you have operated the company. They might even ask to see two years of bank statements to make sure you have at least two years of experience with the business. Secondly, they might ask for a letter from your accountant. If you do your own taxes, you might not qualify for a bank statement loan. Finally, they will study your bank statements to see if you have enough income coming in to pay for a mortgage loan.
What Are the Benefits of Bank Statement Loans?
The main benefit of a bank statement loan is that it gives you the opportunity to buy a house with a loan even if you do not have verifiable income. If you have questions about these loan types, contact a lender.
A bank statement loan is not the same as a mortgage, yet you can use one to buy a home. If you run a business and do not have verifiable income, you might want to consider applying for a bank statement program loan. You can learn more about these by talking to services like Blake Mortgage.
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