Over the next few articles, we are going to look into the world of Non-QM Loan Programs. Now if you are wondering what Non-QM Loan Programs are, these are programs that are non-traditional types of lending which can allow people to purchase homes who would not otherwise qualify. Here at Loan Consultants we make it a point to offer Non-QM Products so that every available borrower may have the option to purchase a home. Included in this list of loan programs you can find is loans to individuals who are 1 day out of foreclosure or a short-sale. Most people might not even realize that Non-QM Products are available for them to use and most of these products were all created out of a necessity for lending options after the market collapse. Back during the 2008 Real Estate and Mortgage Collapse that led to the Great Recession Bank Statement Mortgage Loan may have contributed to the collapse, but these days the Bank Statement Mortgage Loan is used with a different purpose in mind. In this article we are going to tackle the fairly popular type of Non-QM Product and that is the Bank Statement Mortgage Loan.
Now as you can probably tell from the name, we are primarily going to look at qualifying for a mortgage by, you guessed it, using only bank statements. This is perfect for people that are self-employed, have seasonal income, or have otherwise detrimental tax returns. The way the Bank Statement Mortgage Loan works is that borrowers will not be required to supply tax returns, W-2s, or even paystubs in order to calculate qualifying income. What the borrower will need to provide is a combination of 12 to 24 months of bank statements and/or a Profit and Loss Statement prepared by the borrower’s accountant. As you can see here, this greatly benefits the cyclical borrower who may not earn their income in a normal manner throughout the year. We are able to offer such an attractive way to qualify for a mortgage when normally these borrowers may be denied at other lenders, but not here!
Just because you are interested in obtaining a Bank Statement Mortgage Loan, you will still need to purchase a qualifying type of property. Under this program, there are many choices:
– Single Family Home (Owner Occupied)
– Investment Homes
– Second Homes
– 2-4 Unit Residential Properties
– Non-Warrantable Condos
If you are still not 100% certain how the Bank Statement Mortgage Loan works, then we will go over a few case scenarios to help illustrate what is needed of a borrower and how qualification happens under this type of program.
Case Scenario with Bank Statements and P&L Statement
– Borrower is to provide 12 to 24 months of bank statements as well as a P&L from their company that lines up with the bank statement time period prepared by a CPA.
– Prepared P&L will be evaluated to determine reasonable expenses for the company and will also look to match expenses against the bank statements.
– Revenue that is reported on the P&L will also need to be matched to the bank statements in order to verify income for qualification purposes.
Case Scenario with No P&L
– If there is no P&L Statement for the company then bank statements will be used to determine eligibility for the loan.
– Your 12 months of bank statements are averaged in order to determine the monthly income to be used for qualification.
– Deposits are averaged for the same time and doing so will smooth out your business if it is cyclical in nature.
As you can see the Bank Statement Mortgage Loan is a great opportunity for the self-employed individuals to qualify and purchase a home when they do not have proper tax returns, W-2s, or normal paystubs. Given this, it is not out of the question for your credit strength to be verified and a lot of underwriters are not going to want to see overdraft charges on bank statements. These may not be a deal killer, but avoiding them at all cost would be beneficial 100%. So, if you are self-employed and looking to purchase a home or have been denied by other lenders, please contact me ASAP because here at Loan Consultants we are looking to get you in a home and will use all our products at our disposal to make it happen. Please call today at 888-900-1020. If you are looking for an immediate response, please text me or email me direct at firstname.lastname@example.org. We work 7 days a week and all day and night and holidays in order to serve you. Just call and we will be there for you!