What Are Bank Statement Loans?
Bank statement loans are sometimes referred to as “self-employment mortgages.” They allow someone to borrow money without the documentation required by traditional lenders, like tax returns and W2s. A bank statement loan is typically used by entrepreneurs who might not be able to show a consistent background of earnings to verify salary.
How Do Bank Statement Loans Work?
Bank statement applicants aren’t required to supply things like employment verification forms, paystubs, tax returns, or W2s. Instead, they use their business or personal bank accounts to prove cash flow and income.
Some of the same documents are still necessary, however. The types of information that you might have to supply are:
- 12 to 24 months of business or personal bank account statements
- History of self-employment for two years
- A credit score that ranges from fair to good (minimum requirements are set by lender)
- Enough liquid reserves or cash to cover mortgage expenses
- Liquid asset verification (things like mutual funds or 401(k))
- Applicable business license
- Verification from an accountant or tax preparation service to prove -business expenses and verification that you file as an independent contractor
Bank statement loans usually involve more risk, so down payment requirements might be more substantial than normal, and the loans can come with higher interest rates
Who Benefits From a Bank Statement Loan?
Business professionals who have an inconsistent cash flow or those who can’t provide the documentation necessary to take a loan out from a traditional lender are prime candidates for a bank statement loan. Employment positions such as freelancers, consultants, contractors, doctors, real estate agents, investors, and lawyers usually have a harder time obtaining a loan. Sometimes a tax return doesn’t tell the whole picture, preventing credible borrowers from obtaining a loan.
Advantages of Bank Statement Loans
- You can have a higher debt-to
- income ratio
- No W2s, pay stubs, or tax returns necessary
- High loan limits
- Can be used on primary homes, investment purchases, and second homes
Disadvantages of Bank Statement Loans
- Larger down payment requirements
- Higher interest rates
- Not offered by all lenders
Bank Statement Home Loans in South Carolina
If you have ever applied for a mortgage loan, you know how arduous the process can be. If you don’t have the time to jump through all the hoops that it requires, consider bank statement home loans. Bank statement home loans aren’t based on things like your credit rating or history. They are considered solely on your assets. Bank statement home loans in South Carolina don’t take as much time as traditional mortgage loans can. All you need to have is your bank statements information and you can qualify very quickly.
Bank statement home loans are an excellent alternative when you need to be approved quickly because they aren’t based on the many factors that traditional loans require. Literally, all you need to qualify are your bank statements in South Carolina, and you can be on your way to buying the home of your dreams today!
Bank Statement Mortgage Loans in South Carolina
With the red-hot real estate market, many homebuyers do not have the luxury of the extensive time that it takes to get approved for a traditional loan. If you are under time constraints, bank statement mortgage loans might be your best option. Bank statement mortgage loans don’t have as long and arduous a process of applying as traditional loans. All you need to qualify for bank statement mortgage loans are your bank statements - yes, it really is that easy! At HomeSpring Mortgage, we offer many non-traditional lending options, including bank statement loans. Contact us to apply today!