Refinancing allows homeowners to remodel, consolidate debt and take advantage of improvements in the market, but self-employed homeowners have typically had to jump through many hoops to refinance through conventional lenders. Thankfully, new bank statement mortgage refinancing programs offered by non-bank lenders make it easier than ever before for business owners, entrepreneurs and independent contractors to free-up their cash flow and tap into these funds. So, what kind of rates can a self-employed individual expect to get with a bank statement mortgage for refinancing?
Actually, by working with an alternative lender, self-employed homeowners can qualify for bank statement loan rates, which can be just as low as conventional refinancing loans, and sometimes even lower.
Plus, there are other advantages.
Benefits of Bank Statement Mortgage Loans for Refinancing
Bank statement loans are known mostly for qualifying with ‘alternative income’, however, as a non-QM or (non-bank) loan, there are other reasons to use this loan program.
Higher loan amounts (up to $5 million). If your loan amount is over the high balance limit ($ 679,650), a bank statement loan could be a better option than a traditional Jumbo Loan with more restrictive debt-to-income, credit score, and reserve requirements.
Higher loan-to-values (LTV) with no mortgage insurance (MI).
Lower credit scores to qualify. And more leniency after a major credit even such as a bankruptcy or foreclosure.
So, about those rates.
Bank Statement Mortgage Loan Rates
Bank statement loans don’t require tax returns and use bank statements instead to qualify. That means no W-2s or any sort of income verification is involved.
The biggest factor in determining your rate on a bank statement refinance is your loan-to-value ratio (LTV).
LTV is determined by the total value of your property versus the amount of cash you're seeking from the refinance. The lower the LTV ratio, the better the rate you'll receive.
Home Value and Other Factors
When looking to refinance through a bank statement mortgage, one of the main factors will be your current property value because property value and your requested loan amount will determine your LTV.
In addition to LTV ratio, lenders also consider a number of other factors when determining your rate including:
Payment options on your loan (fully amortized, interest-only, etc.)
Loan term/length of the loan
Property type (condo, multi-unit, rental, single-family, etc.)
Working with a broker who is experienced in alternative lending programs is the key to getting an accurate estimate of what rate you can expect, and helping you secure the best loan.
Benefits of Bank Statement Refinance Loans
For self-employed homeowners, bank statement refinance loans offer a wide variety of benefits. 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 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.
How to Qualify for a Bank Statement Mortgage Refinance
Before applying, you’ll need to get a few things organized:
Know your credit score. It directly determines your interest rate, loan-to-value, loan amount, and reserve requirements. The higher the credit score, the lower the rate.
Know your loan-to-value ratio. For buying, it’s your down payment amount. For refinancing, it’s your estimated home value.
Review the last 12 months of your business and personal bank statements. This will give you an idea as to what your monthly qualifying income may be.
Securing a bank statement mortgage refinance is not a cookie-cutter process. Since each step in the process is crucial to your success, the most important step is choosing a lender who specializes in bank statements loans.
Ready to Get Started?
If you’re a self-employed homeowner looking to leverage your home equity, lower your rate or access more cash, a bank statement refinance can help. Download our ebook, Ultimate Guide for Self-Employed Bank Statement Mortgages, or contact us 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.