The Ins and Outs of Working with a Mortgage Broker to Get a Self-employed Mortgage Loan
Bank statement loans, also referred to as self-employed mortgage loans, are breaking down barriers for entrepreneurs, self-employed pros, and independent contractors who want to buy or refinance a home.
But if you fall into one of these categories, don’t go running to your local bank or credit union just yet. In fact, you might be better off using a mortgage broker instead — and we’ll show you why.
First though, let’s cover the background. What is a self-employed mortgage in the first place?
What You Need to Know About Self-employed Mortgage Loans
Most banks, credit unions, and large mortgage lenders don’t offer bank statement loans because they don’t fit the Consumer Financial Protection Bureau’s existing rules on Qualified Mortgages (QMs). A Qualified Mortgage has four rulings lenders must follow, including the “ability-to-repay” rule.
Unfortunately, this “ability” is largely judged using a borrower’s paystubs, W-2s, and income tax returns (all of which may not be available or may not fully reflect a self-employed professional’s true income.) As such, it’s often difficult — sometimes even impossible — for non-traditional workers to qualify for these loans and refinance or buy a house.
That’s where bank statement loans come in. On the backs of this more restrictive lending, a few brave lenders have stepped out to originate loans that do not fit the QM rule. Dubbed “Non-QM loans,” these allow borrowers to prove their ability to repay in a simpler way: using bank statements and proven cash flow.
Why a Mortgage Broker is Your Best Resource for Getting a Self-employed Mortgage Loan
Non-QM bank statement loans are specialty programs that aren’t offered by every lender. Because of this, it’s often better to use a mortgage broker — a professional who’s familiar with a wide range of lenders across the country —if you’re looking to use one of these loans.
Mortgage brokers have a large network of wholesale lenders they work with, and they know exactly who offers self-employed loans, what their qualifying standards are, and who’s your best bet for getting the mortgage you need to refinance or buy a house.
Mortgage brokers who are experienced with alternative lending programs can also shop around for you to ensure you get the best rate (as well as the lowest fees and closing costs) from the non-QM providers that are out there.
Using a mortgage broker who is experienced with alternative lending programs can also:
- Save you time – You don’t have to do the shopping around yourself. Your broker will do it all on your behalf, presenting you with the best loan options to choose from once they’re done.
- Qualify you for exceptions – Brokers have long-standing relationships with their lenders, so if there’s a requirement you don’t quite meet, they can help you get an exception and still qualify for your loan.
- Prevent errors and delays - Thanks to their intimate knowledge of the process and their relationships with lenders, brokers can ensure your loan file is complete and accurate from the very start. No delays or bottlenecks here!
- Streamline your application process – Your broker will put your entire loan file together, so you don’t have to. That means a faster loan submission (and a faster approval, too!)
Working with a mortgage broker is easy, too. They’ll start by reviewing your bank statements to determine your monthly qualifying income. Then, they’ll look at your credit report and debt-to-income ratio, using this data to shop around for the best rates and fees among their stable of lenders. Once you’ve chosen a loan option, they’ll submit your loan application, help you gather your documentation, and monitor your loan’s progress every step of the way. You should have your loan funded within three to four weeks.
How to Start Working with a Mortgage Broker Experienced in Alternative Lending Today
The moral of the story is this. Mortgage brokers can give you more options, better rates, and an easier mortgage process on the whole. If you’re waffling on using a broker because you’re worried about fees, don’t fret. Mortgage brokers are commission-based, so if you don’t get your loan, they don’t get paid. That gives them extra incentive to work hard on your behalf to both find you the best loan option and ensure your loan is approved.
Generally, the more challenging you expect your loan approval to be, the more you should consider enlisting an experienced mortgage pro to help.
Ready to Get Started?
If you’re a self-employed homeowner, there’s never been a better time to purchase or refinance. At HomeLife Mortgage, we are here to help. 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.