5 Reasons Why Bank Statement Mortgage Loans Could Be Beneficial

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Urgent need of finances can come at any time. It is this time when you have to see how you can manage the funding. One of the most common routes to this is availing a loan or financing. However, this depends on a number of factors, and there are multiple types of loans you can look to avail but you have to ensure which one you are better eligible for.

If you don’t have a steady income, own a business but have a good bank statement to show, you can consider applying for a bank statement mortgage loan.

What are Bank Statement Mortgage Loans?

These loans are a category of home loans that helps borrowers to get a mortgage without the regular documents that are required by most lenders to approve a loan. These loans work for those who don’t have a steady income or have multiple employers who approve their salaries. These loans are issued based on personal information and bank statements instead of tax returns or employer verification.

Benefits of Bank Statement Mortgage Loans

  1. No Tax Returns

One of the biggest reasons why these loans are beneficial is that you don’t have to pay any tax returns on these types of loans. For regular loans, lenders ask for the average tax returns and eligible non-self-employed individuals often obtain their forms from their employers every year in order to verify proof of income.

For self-employed individuals, this is not possible because they don’t have a standard employer, and they have different sources of money coming from.

  1. Accurate View of Finances

Since the lender thoroughly looks at your bank statement, they check out the deposits over time so that they can know your average monthly income. This way you can normalize any irregular pay over the course of the year. The average monthly income gives you an idea of how much you can afford. 

  1. Borrowers get to Enjoy High Loan Limits

Another biggest benefit of bank mortgage loans is that the borrower can enjoy high loan limits. Usually, the loan limits are considered after keeping various factors in mind such as credit score, location, etc. However, each lender can only give you the amount he or she is comfortable with. In the case of these loans, borrowers can get high limits based on the prevailing rates.

  1. Manageable Down Payment

A down payment is the most challenging part of the whole process of buying a home. Most homebuyers look for assistance when it comes to funding their down payments. However, most lenders offer manageable down payments as low as 3% of the total mortgage.

  1. The Debt-to-Income Ratio Doesn’t Affect the Loan

The debt-to-income ratio (DTI) is the term that is used to determine the amount of income a person or an organization has. This term is used by lenders to assess the borrowing risk of a person or an entity.

A low DTI ratio is an indication of sufficient income to service debt. However, it doesn’t matter whether the borrower has a high DTI ratio in applying for this loan.

For anyone who applies for a bank statement loan, it is very important to tread carefully, assessing all the factors.

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