Part of the gig when you write for A Nightmare on Loan Street Blog is that you hear about the tough times. Like my friend Jimmy - he’s in the process of getting a conventional mortgage approved (hopefully). This guy is constantly searching for documents to provide, like his paystubs, W2s, his 8th grade report card, and such. It’s a lot.
Now imagine that you’re self-employed, and don’t have some of these documents to begin with. A lot of self-employed workers and small business owners don’t have pay stubs they can turn over. And since most of them want to reduce their taxable income by maximizing their legal business deductions, their W2 is not going to accurately reflect their income.
Maybe you are self-employed and don’t have to imagine that part. Well, good news. I have an option you may want to consider called a bank statement loan. A bank statement loan is an alternative lending option that uses 12-24 months of bank statements to verify your income. Sounds amazing right? Let’s discuss some of the other benefits of a bank statement loan.
Uses Documents You Already Have: like we’ve already discussed, the bank statement loan will use 12-24 months of bank statements. You can for sure find copies of these statements online or from your bank.
Accurate View of Your Finances: since the lender is looking at your bank statements, they are going to check out the deposits over time to come up with an average monthly income. This helps normalize any irregular pay over the course of the year or those that have seasonal income where it all shows up at once. The average monthly income is used to determine how much you can afford. This might be kind of different than if a self-employed worker only provided a tax return or W2. This is key because self-employed workers can continue to maximize their legal deductions while giving the bank a clear view into their finances.
A potentially quicker timeline: since there are fewer documents involved, the bank statement loan process CAN be quicker than a conventional loan. I use the words “potentially” and “can” because part of this is up to the borrower. Do you have your documents ready to go? Are you being totally transparent in your application? If the answer is “yes” than the lender is able to move quickly. If there are waits while you get your bank statements in order or questions about something you forgot to mention, this can slow things down. The good news is that the borrower is kind of in the driver’s seat regarding the timeline.
Convenient for the self-employed: if you’re a general contractor, would you rather provide your bank statements or dig up a bazillion 1099s for the bank? What if the bank is asking for pay stubs and you don’t have pay stubs? The bank statement loan helps solve these challenges when it comes to documenting your true income.
For small business owners or the self-employed, a bank statement loan may be the solution to a mortgage challenge with the big banks. If you think a bank statement loan can help you, contact the experts at Truss Financial Group today. They specialize in bank statement loans and can get you the answers (and loan) you need.