The number of women homebuyers is on the rise. According to the National Association of Realtors, single female borrowers made up 18% of all home sales in 2018 — double the share of single males.
What’s more? Even those that co-borrow with a spouse or significant other are taking the lead position on their loans. Data from Ellie Mae shows that in summer 2019, 31% of all Millennials had a female primary borrower. A year prior, it was just 25%.
There’s a problem, though: traditional mortgages aren’t built to serve today’s modern women.
Why Traditional Mortgages Don’t Work for Modern Women
For many of today’s female homebuyers, the traditional mortgage loan just isn’t enough. That’s because more and more women are breaking out of the 9-to-5 workplace and striking out on their own, becoming entrepreneurs, freelancers, contractors, and self-employed professionals.
It’s true. According to the 2018 Self Employment Report from FreshBooks, a whopping 40% of all self-employed Americans are women. What’s more? There are 12.3 million women-owned businesses in our country — a jump of 57.6% over 2007.
Unfortunately, traditional mortgage loans aren’t great for entrepreneurs and the self-employed. First off, they require documentation that many self-employed pros just don’t have — things like W2s, pay stubs, employment verification forms, and more.
But more than that? They also rely heavily on taxable income (what’s shown on your tax return). And since many of these professionals maximize their write-offs and deductions, it can often appear they don’t have the cash to comfortably handle a home purchase.
This results in either 1) sky-high interest rates or, worse yet, 2) outright denial of the loan altogether. Obviously, neither is a good option for the modern woman looking to buy or refinance a house.
Enter the Bank Statement Loan
As more and more women become non-traditional workers, the need for non-traditional mortgage products grows. That’s where the bank statement loan comes in.
Bank statement loans don’t rely on employer-generated paperwork like W2s or pay stubs, and they don’t even require a tax return. Applicants can qualify using only their credit score and bank statements showing their cash flow and incoming payments.
Moreover, bank statements are flexible. You can use only self-employment income, you can add in your spouse’s traditional, 9-to-5 salary to help with qualifying, and you don’t even need a huge down payment to do it. You can also use bank statement loans to refinance your existing mortgage (to reduce your payments, consolidate debts, or access your home equity), and they come in both fixed-rate and adjustable-rate options.
All in all, bank statement loans are great for women who are:
- Real estate agents
- Small business owners
- Freelance writers, designers, marketers, web developers, and creatives
- Daycare and home health providers
- Restaurant and salon owners
- Event planners and coordinators
- Interior designers and decorators
Basically, if you own your own business, work for yourself, and don’t have W2 income, a bank statement is probably a smart choice for you.
Qualifying for a Bank Statement Loan
To qualify for a bank statement loan to buy a home or refinance an existing loan, you’ll need a few things. But the most important? That’d be bank statements for the last 12 to 24 months.
Your bank statements will be used to assess your income and cash flow, as well as evaluate your risk as a borrower. You also may need the following to qualify for your bank statement loan:
- Your business license (if applicable)
- A credit score of at least 640 in most cases
- A down payment of at least 10% (if you’re buying a home). If you’re refinancing, at least a 10% equity stake in your home is required.
- Enough liquid assets to cover your closing costs and down payment, plus enough cash reserves to cover three to six months of mortgage payments.
Generally, lenders will want to see the deposits coming into your account are steady and/or increasing over time. They’ll also look at where the money is being spent and how seasonal your cash flow is.
Getting Pre-approved for Your Bank Statement Loan
Pre-approval is an important step in the mortgage process as it allows you to gauge how much you may be approved for, as well as what your interest rate will likely be.
A pre-approval letter can also give sellers more confidence in any offers you submit, and it could help you stand out in a bidding war.
To get pre-approved, you’ll just need to give your lender some basic information, including:
- Your name and contact info
- Where you’re looking to buy a home
- Your estimated income
- Your estimated credit score
- The purpose of your loan (purchase or refinance)
Once your lender evaluates this info (it takes less than 48 hours at HomeLife), then you’ll receive a pre-approval letter stating how much you’re approved to borrow and at what interest rate. You can use this to guide your home purchase and should also include it in your bids.
Bank Statement Loan Process & Timeline
The bank statement loan process is pretty fast, so once you find a home and your offer has been accepted, you can usually expect to close within the month.
Here’s what the process looks like start to finish:
- Send your accepted offer/sales contract to your lender.
- Fill out your full loan application and agree to a credit check.
- Submit your bank statements and any other documentation your lender requires. (You can speed this step up by having your paperwork organized and ready early).
- Get your home inspected and appraised (your lender will handle the appraisal).
- Wait for your loan to be underwritten and approved.
- Attend your closing appointment, pay your closing costs, and get your keys (or your cash from the refinance).
It’s a simple, straightforward process for women homebuyers whose employment, well, isn’t so clear-cut.
Psst… You can also use a bank statement loans to refinance. Consolidate high-interest debts on credit cards, loans, etc. Free up cash for home improvements, or purchase a second home, vacation home, or rental property.
Ready to Get Started?
Are you a self-employed woman looking to buy or refinance a home in 2020? Then we can help. Contact HomeLife Mortgage to learn more about our bank statement loans or apply for our 48-hour pre-approval today.
Our bank statement loans are simple, offer high balances, require no private mortgage and come with no pre-payment penalties whatsoever. Download our ebook, Ultimate Guide for Self-Employed Bank Statement Mortgages, or contact us to discover how much you could save by refinancing.
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About HomeLife Mortgage
For more than 25 years, HomeLife Mortgage has built a strong reputation in California and Florida as a leading mortgage broker, servicing the needs of borrowers who have been unable to obtain conventional financing. HomeLife Mortgage is at the forefront of non-bank lending offering the next generation of mortgages including Jumbo Non-Prime Loans, Real Estate Investor Loans and Bank Statement Loans.