If you are going to apply for a mortgage, you need to document your income. From savings to debts, everything is included in this process. Now, what if you are a self-employed person? Can you still apply for a home loan? In this economic situation, everyone is need of a mortgage. When you are working as a seasonal or self-employed person, you might face rejections for conventional loans. At this time, bank statement loans are the only options you have.
There are still many people who are completely unknown to this type of mortgage. When a borrower applies for a traditional mortgage, the tax returns, paycheck stubs, and W-2s are required. For the bank statement loans, the traditional documents are not required for verifying the income. Whether you are a freelancer or independent contractor, you need to remember particular tips about bank statement home loans in Houston. Most importantly, you should remember which documents to keep for the mortgage. Go through the rest of the article to understand the requirements.
Provide a Proof of Income
This is one of the primary things to obtain before you proceed with the mortgage. It is essential to find a pay stub, paycheck stub, or pay slip. You can also ask the employer to send the details regarding how long you have worked. However, showing proof of income often becomes a tedious job for the freelancers. Lenders may ask you to submit the pay stubs dating back the recent 30 days of your job. If you are getting paid irregularly due to the nature of the workload, you might not provide enough evidence. Whatever the situation may be, you should acquire a signed letter from the employer. Or, a document on the payroll schedule is also considered. If you can, the recent bank statements are necessary for proving your capabilities of repaying.
Make Sure You have Good Credit Score
This discussion depends on the lender because it varies. It is better to show at least a 620 credit score for the bank statement home loans. If there is no way to pull up the credit score to 620, you must have a thorough discussion with the lender. When the credit score is as low as 620, you are still good to go. But nevertheless, you should figure out how to improve the credit score. The better your score, the more you can benefit from the bank statement home loan in Houston.
Remember to Acquire Other Documents
Apart from submitting income proof and maintaining good credit scores, you need to do more. For the bank statement loans, you need to provide the lender with your social security card, driver’s license, and home insurance. If you are running a business, you might have to show a copy of the business license.
The bank statement loans are qualified as non-QM and every lender in the market cannot offer you the bank statement mortgage. As long as you are self-employed or earning seasonally, the loan would be the perfect option. So, get in touch with a lender for further guidance.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.