Things to consider
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Higher Interest Rates: As a result of the different income verification, lenders perceive these loans as a higher risk, leading to higher interest rates.
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Larger Down Payments: You may be required to make a larger down payment to help offset the increased lender risk.
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Stricter Requirements: While the income documentation is different, you'll still need to meet requirements like a minimum credit score and show consistent deposits in your bank account history.
Flexible Mortgage Options with a Bank Statement Loan
Choose a bank statement loan if you're a self-employed individual, freelancer, or business owner whose income isn't reflected well on tax returns. These loans use your bank statements to show a more accurate picture of your income, offering a more flexible path to homeownership than traditional mortgages that rely on pay stubs and W-2s. You should also consider them if you need a loan quickly, as they can have a faster approval process, though they often come with higher interest rates and potentially larger down payment requirements.
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Benefits of a bank statement loan
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Flexibility for Non-Traditional Income: They allow lenders to see your real earnings from bank deposits, rather than being limited by potentially misleading tax documents.
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Fewer Requirements: You don't need W-2s or traditional tax returns, which is a major burden removed for many self-employed individuals.
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Faster Approval: By relying on bank statements instead of extensive tax documents, the application and underwriting process can be quicker.
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Greater Opportunity: These loans provide a way for people with unique income situations to achieve homeownership.