It is not a secret anymore! In order to qualify for a mortgage, you need to have a stable income. However, you might be in trouble to get a mortgage successfully if you are self-employed. Yes, your freelance or seasonal career might get in the way of your lifelong dream. As long as you can prove certain things, you can easily apply for a bank statement home loan. For instance, you might have to show one year of income tax documents to validate your capability of repaying.
Before you dive right into the bank statement mortgage process, you should remember certain things. For starters, the lender wants to know that you are financially strong enough to repay the amount. When you have the minimum documents to prove, the lenders can regard them as a good sign. If you were applying as a traditional borrower, you might have to arrange a W2 from the employer. This is an indication of how much he/she makes in a month or week. As we know, you are working as a freelancer; you might hit the rocky road. In order to smooth out things and heave a sigh of relief, there are a handful of tips to remember before applying for bank statement home loans in Houston. Go through the rest of the article now.
- Always Show Your Income Proof to the Lender
Freelancers cannot produce W2s like traditional homebuyers. For this very reason, the lenders expect them to submit income proof of the last 2 years in tax returns. Now, this can get tricky! If you wish to utilize the bank statement home loan, you need to prepare for it too. No matter how much time it takes, you should keep the documents ready before applying for the mortgage.
- Be Ready to Pay High Interest Rate
If you are self-employed with high income, you need not pay a high-interest rate. If you cannot find a traditional lender, you might have to rely on more expensive options. The non-traditional lenders offer loan products for which they might not even qualify. If the borrowers qualify for the bank statement home loan, the high fees and rates are to follow.
- Keep the Credit Score on Check
The bank statement mortgage rate is highly influenced by the credit score. When a person has a high credit score, he/she can easily qualify for the low mortgage rates. In this way, you can save thousands over the loan term. So, check the credit report on a regular basis. If there is any discrepancy in the report, you can work on it. Try not to close credit card accounts. If you have paid off the due payments, the closing accounts pull down your score. You should deter from making large purchases even before the loan closes. This leaves an impact on the credit score and increases the mortgage rate.
Being eligible for a bank statement home loan is not excruciatingly difficult in Houston. Of course, you should undertake meticulous research right before diving into the process. Don’t forget to get help from a professional lender!
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.