Bank statement loans are an alternative type of loan that leverages bank statements as the primary data source by the lender. These types of loans have been around for a while, and they’ve offered small business owners, entrepreneurs, and the self-employed a more feasible way of getting a loan when traditional methods fail.
But wait, there’s more! More in the sense that this type of loan can be helpful for a variety of reasons. Today, we’re going to review my top 5 reasons to use a bank statement loan.
- You are Self-Employed or Own Your Own Business
If you’re self-employed or own your own business, a bank statement loan offers a clearer path towards a loan than traditional options. By using 12-24 months’ worth of bank statements, borrowers will definitely have the documentation needed to apply. The challenge that this crowd can face when applying for a loan at a big bank is they don’t have paystubs from the 1st and 15th or a W2 that tells their full financial story (if they maximize their legal deductions).
By using bank statements, lenders can come up with an average monthly income to determine the amount an applicant can borrow. Bonus info for those that work on commission or seasonal income: this can help you too. The average monthly income can help “even out” any lopsided swings in income.
- Your Credit Score is Less Than Perfect
A credit check is a given when applying for a loan. Same holds true for the bank statement loan. The difference is that the acceptable range is a bit more forgiving with the bank statement loan. Lenders are going to be looking for a score of 620 or higher. So don’t let a blemish on your credit score hold you back when it comes to a bank statement loan.
Of course, if your credit score needs improvement, you can always work towards paying off debt. I know this is easier said than done, but it’s definitely possible.
- You Are Retired
Ahhh, retirement. No work, less stress, and every day is Saturday…unless you are trying to get a mortgage for a vacation home. While retirement has many upsides, meeting bank requirements for a loan is not one of them. Think about it: many retirees have a high net worth but little to no income. I know, quite a pickle.
Bank statement loans offer an option for retirees seeking a mortgage. I’ll be you didn’t see that one coming :)
- You’re Loan is Hella Large (up to $10M)
Home prices in California have been known to be on the high side. Especially when you look at Southern California. The sunshine, the beach, and the mountains are all right there. What a combo. Throw in a high-end home on really expensive land, and you’ve got a recipe for a large mortgage at times.
If you’re seeking a jumbo option, a bank statement loan may be a good choice.
- Low Monthly Payments are the Priority
A bank statement loan has a few options to lower the monthly payment: a 40 year fixed and interest only options. The 40 year fixed has a larger overall cost associated with it compared to a traditional 30 year fixed, but since the cost is spread out over an extra decade, it will definitely lower the monthly payment. Interest only loans are also available. Since you’re only paying interest, the monthly payment is much lower compared to an option when you’d be paying interest and principal.
If any of these ring true for you, I’d recommend calling Truss Financial Group to learn more. Truss is a leader in bank statement loans, and their expert team can help get the ball rolling for you or just answer some questions to help with your decision.