Historically, it's been pretty hard for self-employed homeowners to refinance, which has limited their ability to access cash for renovations, consolidate their debts or take advantage of lower rates as the market changes. But alternative lending programs, like Bank Statement Mortgage Loans, have now changed all that.Being constrained by the requirements of obtaining a conventional loan is thankfully a thing of the past.
No longer does non-W2 income disqualify you from refinancing — or from favorable refinancing terms. As long as you have solid, consistent cash flow and regular deposits, refinancing isn't just a possibility; it's an easy and affordable option for any self-employed homeowner.
Bank Statement Mortgage Loan Rates
So you’re a business owner, and you’ve decided that a Bank Statement Mortgage Loan is the perfect way for you to finally tap into your home equity. But naturally, you're likely wondering about rates on these loans. If you're not required to show tax returns, W-2 or any sort of income verification, it must mean they come with sky-high rates, right?
Bank Statement Mortgage Loan rates can be just as low as traditional refinance loans, if not more so. Plus, they come with higher lending limits and no private mortgage insurance (PMI) requirements mandated by conventional lending programs.
The biggest factor in determining your rate on a bank statement refinance is your current property value and your requested loan amount. This will determine your loan-to-value (LTV) ratio — the amount of cash you're seeking from the refinance divided by the total value of your property.
For example: $ 400k loan amount divided by $800k property value = 50% loan-to-value (LTV.)
In general, the lower the loan-to-value ratio is, the better the rate you'll receive.
In addition to loan-to-value ratio, lenders also consider a number of other factors when determining your rate.
Your credit score and payment history
The payment options on your loan (fully amortized, interest-only, etc.)
The loan term/length of the loan
The property type (condo, multi-unit, rental, single-family, etc.)
Rates vary greatly from homeowner to homeowner, so it's best to talk to an experienced Bank Statement Mortgage broker to get an accurate estimate of what rate you can expect (that’s where we come in.)
Benefits of Bank Statement Mortgage Loans for Refinancing
For self-employed homeowners, Bank Statement Mortgage Loans for refinancing offer a wide variety of benefits.
In many cases, homeowners use these mortgages to:
Consolidate high-interest debts on credit cards, loans, etc.
Free up cash for home improvements and renovations
Purchase a second home, vacation home or rental property
Cover college tuition or medical costs
But the options don't stop there. Because bank statement refinances offer up to 90 percent of a home's value (up to $5 million) with no mortgage insurance (MI) required, they're able to free up significant amounts of cash to homeowners who seek them.
The financial possibilities are endless for those who qualify. Consider this real client scenario.
HomeLife Mortgage Client Success Story
Matt is a successful real estate developer who came to us seeking assistance with refinancing. Matt used his credit cards to complete finishes on his brand new custom home. He always paid his credit debt on time, however the high utilization of credit cards had dropped his credit score from 725 to 655.
Matt was seeking a $1.5 million refinance, but needed a loan-to-value of 75%, to pay-off all of his obligations. The challenge was obtaining a refinance over $1 million with a lower credit score. Because of his excellent credit history and good cash flow, we were able to obtain an exception and grant his full loan request amount.
Ready to Get Started?
Rising home values are creating record levels of home equity making this a great time to tap into your equity and achieve your financial goals.
I you are a self-employed homeowner looking to leverage your home equity, lower your rate or access more cash? A Bank Statement Mortgage Loan for refinancing can help. Download our free ebook, The Ultimate Guide for Self-Employed Bank Statement Mortgages,or contact one of our brokers to learn more about these no income verification mortgage loans today.
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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, Bank Statement Loans, FHA Loans and VA Loans.