When seeking a conventional mortgage, you will be expected to provide a variety of documentation. This could include your most recent tax returns as well as your recent pay stubs and other information. But there are certain scenarios where providing this type of information might not be an option for you. In this case, you may still be able to get a loan by seeking out a bank statement mortgage. Here's what this type of mortgage is and why you might want to go down this path.
You'll Provide Your Recent Bank Statements
As the name implies, a bank statement mortgage will have you printing out a number of recent bank statements to provide to the lender. Other lenders may be able to connect electronically to your bank account if your main bank supports this option. The lender will try to verify your income by reviewing your bank statements in detail.
This Is a Popular Loan Type for the Self-Employed
Bank statement mortgages are ideal for people who might not get a traditional pay stub. Self-employed individuals, for example, may get paid through third-party processors and then transfer the money directly to their bank account, and there's not technically a "stub" involved. Self-employed people might also get all of their money upfront and have to take out taxes on their own after receiving the money, which further complicates matters. Reviewing bank statements is a way that a lender can still get a general overview of the person's financial situation even without traditional data to review.
Bank Statement Mortgages Are Ideal for Fluctuating Income
Perhaps you are not self-employed but you still have fluctuating income for one reason or another. Perhaps you are involved in a form of work that is seasonal in nature and you get more money during certain times of year. For example, people that work hourly in retail may put in more hours during the holiday shopping season. If your pay stubs will show fluctuating income, reviewing bank statements will verify that you are financially secure even when your income dips on occasion.
Streamline the Mortgage Application Process
Another reason to consider a bank statement mortgage is that it can be simpler. You won't have to provide as many tax documents to prove your income level. This may streamline the overall timeline and get you approved faster.
Other Criteria May Still Apply
Keep in mind that you still may have to qualify using other criteria like your credit score or proof of how long you have been self-employed. Contact a provider of bank statement mortgages to learn more.Share