When your friend suggested you should get a bank statement loan, you might wonder what it is. A bank statement mortgage is a gateway to achieve an essential part of your American dream – buying a house. As a freelancer, you might have faced a solid amount of struggle to get through the process. Most of the government-backed and conventional loans turn their backs against you. The mortgage has not received much popularity as it should. But it is the perfect solution for every self-employed person looking for a permanent roof over the head.
As a freelancer, you might have faced the problem during the documentation. The conventional loans ask for pay-stubs or tax returns as proof that you are employed. Freelancers often take up different gigs at the same time. This is where the bank statement home loans in Houston shine with their unique guidelines only for freelancers or seasonal workers. Being a self-employed person should not stop you from getting the much-needed home financing.
So, here is what you should remember about applying for the bank statement mortgage.
A Cursory Glance at the Basic Requirements
If you are interested in a 12-month bank statement loan, you must carry the bank statements for business or personal accounts. The lender demands 2 years of self-employment along with any documented evidence. For instance, if you run a business, you should submit the registration and business bank statements. The usual deposit amount for the personal bank statement should be around $10,000 per month. For the business bank statements, the amount should be $20,000 per month. Also, residents or citizens of the US can apply for the mortgage. Nevertheless, the credit score benchmark is 550 for primary occupancy purchases. Many people might have told you that the bank statement loans ask for high credit scores; however, the requirement is more convenient than conventional loans.
Bank Statement Loans vs. Conventional Loans
For seasonal workers, restaurant owners, event managers, and freelancers, bank statement loans prove to be more useful. First of all, it does not require as much documentation as traditional mortgages. However, the freelancers pose more risk for the lender than the traditional lenders. For this reason, you cannot expect 5% or 3% down payment. If you cannot put down 20%, you can go for 10%. With a 10% down payment, there is no private mortgage insurance. You can work on improving your chances to receive lower interest rates and increasing credit scores. Review your credit score and do not make large purchases before the home loan. You should look at debt and pay it off before proceeding. Moreover, the bank statement loan is designed by keeping the freelancers in mind. Therefore, it remains a better choice than conventional mortgages.
In the end, the loan is available for anyone who wants to purchase and refinance. For your part, you can use a mortgage calculator to understand whether you can afford the mortgage. Also, ask the lender whether greater loan limits and co-signers are available for the loan.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.