Using a Bank Statement Loan to Purchase a Columbus Home

Using a Bank Statement Loan to Purchase a Columbus HomeIf you have plans to purchase a Columbus home and are self-employed you may want to utilize a bank statement loan to help you verify your income and qualify for a loan that will provide the funds for the Columbus home you need and will love. 

How Bank Statement Loans Work

Instead of utilizing a W-2 to confirm and provide proof of income a self-employed borrower can use bank statements to verify their income. Verifying income and debt-to-income ratios helps a lender determine if a potential Columbus homebuyer would be capable of making loan payments. 

Self-employed workers are not issued the standard paperwork an employer is required to provide to an employee. They do not have W-2 forms or pay stubs to provide documented proof of income. They also do not have a steady and contracted rate of pay that an hourly or salaried worker does. Their income can fluctuate with the amount of business they conduct or the amount of business expenses they have to pay out in a given month. 

Instead of the traditionally required documents to prove the income of a self-employed borrower lenders will look at the bank statements of a self-employed borrower along with other qualifying factors. 

Bank Statement Loan Common Requirements

The biggest requirement of course is providing bank statements to prove a stable income and enough money flowing through your account to more than cover the cost of your loan payment and other debts. The number of bank statements a lender will require an applicant to provide will differ. Lenders might require anywhere from 12 to 24 months of bank statements to ensure the borrower has the means to pay for the home purchase. 

In addition to providing bank statements, there will be other qualifying factors as there are with a traditional loan using a W-2 to verify income. These are items like meeting a certain credit score, having an ideal debt-to-income ratio, and requiring a certain down payment amount. A lender may also ask the borrower to escrow home expenses like insurance premiums and property taxes. 

Finding a Bank Statement Loan

How can a self-employed hopeful Columbus homebuyer find a lender that will allow them to provide bank statements to qualify for a loan? The best way to do this may be to work through a mortgage broker. A mortgage broker makes it their job to shop for all loan products available to their client. They make sure they are aware of current loan programs and are aware of what loans a particular client would have available to them and what their best options would be. It is like hiring a personal shopper but for mortgage loans. 

If you do not want to use a mortgage broker you can research available bank statement loans on your own to find lenders that offer them. You can then contact these lenders on your own. We would suggest calling them up to ask them initial questions about their products before filling out an application. Because filling out an application can start the process of a credit score inquiry which could lower your credit score. Every time someone makes what is called a credit pull to determine your score your score takes a small decrease if there are several pulls made in a certain timeframe. 

If you do contact lenders on your own it is always in your best interest to contact more than one lender to make sure you are receiving the best loan terms and best mortgage rate possible. 

If you are self-employed and looking to purchase a home in Columbus I am here to help. Contact me anytime with any Columbus real estate needs. Whether it is buying, selling, or investing. 

Post a Comment