When you start shopping for a car, you might be more concerned with additional features and specialty paint jobs than you are about the monthly bill. Unfortunately, the wrong financing can cost you dearly. Compound interest never sleeps, which means that you might be paying much more than you should if you work with the wrong lender. I want to help you to make great financial decisions, which is why I created this website. However, if you can remember a few tricks and keep those payments to a minimum, you can drive away with the car of your dreams without breaking the bank.
For self-employed individuals and business owners, the process of obtaining a mortgage can be a challenge. Unlike traditional employees who receive a W-2 form, self-employed individuals often have a significant portion of their income that is not reflected on this form. This can make it difficult for these borrowers to provide proof of income to a lender, leading to loan rejection or less favorable loan terms. However, that does not have to be the case. With a bank statement mortgage, even self-employed individuals can get a very reasonable loan, so here is a simple examination of how this process could help you.
How A Bank Statement Mortgage Actually Works
As stated briefly above, a bank statement mortgage is a type of home loan that uses bank statements, rather than traditional W-2 forms, as proof of income for loan qualification. The lender will review the borrower's bank statements over a specified period to determine the average monthly income and use that information to approve or deny the loan. This type of mortgage is designed to meet the needs of self-employed individuals and business owners who have a significant portion of their income that is not reflected on W-2 forms. With a growing number of Americans earning income in non-traditional ways, this is becoming a more and more necessary pathway for a loan.
More Flexible Loan Requirements
Bank statement mortgages often have more flexible guidelines and lower documentation requirements compared to traditional mortgages. This makes the loan application process less cumbersome and less time-consuming for self-employed borrowers. In addition, bank statement mortgages may offer more agreeable interest rates and loan terms compared to other types of loans for people with minimal options, making it an attractive option for small business owners and freelance workers. In what is a growing gig economy, for many people, this is the only way to even potentially get into the real estate market.
Building Up A Stronger Credit Profile
Obtaining a bank statement mortgage can also help self-employed individuals and business owners build a strong credit profile. By making on-time mortgage payments, borrowers can demonstrate their ability to manage debt responsibly and make payments on time. This can lead to a higher credit score and improved credit standing, making it easier to obtain credit in the future. While this might seem like an archaic system, it is one that very much still matters to this day and you should not underestimate this benefit.
Contact a financing service for more info.
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