The Bank Statement Mortgage

Written by Michael A. Foote, CMB on . Posted in 100% financing, bad boys, bank statement, direct lender, Loan Processing, mortgage banker, mortgage broker, non-prime, purchase loan, Real Estate, refinance

The Bank Statement Mortgage:bkstatementloan

Once again new mortgage products are hitting the market and serving a smaller more niche segment of American consumers. This is a great alternative product for the homebuyer and homeowner. Typically coming with 30, 25, 20, 15, 10 year fixed, adjustable rates and even some interest only options. Let’s take a look at the bank statement mortgage, the “Good Bad and the Ugly”. Let’s start with some negatives.

The Bank Statement Mortgage generally comes with a higher than average interest rate. It makes sense. The more risky a mortgage is, the more it costs. Using bank statements as income to qualify is by itself more risky. The lender is basically acknowledging you may not be able to qualify for a mortgage if you used your traditional income documentation, like tax returns, W-2’s, paystubs etc. Expect an interest rate at least 1.5% over the going conforming market rate and cost. You will almost certainly pay fees/points to get a manageable rate. But again, it is an Alternative when you’ve been turned down for a conventional conforming mortgage.

You don’t get to use ALL your deposits.  Typically, you cannot use all your deposits. Lenders will typically disallow, returns, refunds, cash (unless typical for business) and transfers from other bank accounts you control. You will also most likely have an expense factor subtracted from your deposits… Oh yeah and your deposits need to usually be within your Profit & Loss Statements stated income. It’s not JUST your bank statements being used it the whole financial picture. A qualified licensed Loan Officer is critical for a smooth bank statement loan.

You may be able to use business or personal bank statements. This mortgage product sometimes allows wage earners to use personal bank statements and self-employed borrowers to use business bank statements. The percentage of deposits you can use, can be impacted by the number of owners of your company.

You can borrower up to 90% of your home’s value. Or put down as little as 10% if you are buying a home. This program has slowly expanded and there are programs that can allow you to borrower up to 90% of the value of you home. Purchase, Cash-Out or Rate and Term Refinances are available.

There isn’t usually any Mortgage Insurance required on these products. So no mortgage insurance payment every month if you borrower more than 80% of your value.

Don’t forget to check for a prepayment penalty. Some of these products carry with them a prepayment penalty, in the event you pay the loan off early.  Make sure to read your loan documents carefully!

 

Michael Foote 

michael@michaelfoote.com 

Certified Mortgage Banker, Licensed Real Estate Broker. NMLS 235435, 1059372

Owner – Broker – Operator – Originator

 

 

 

 

Want to know the secret to getting your Real Estate offer accepted? Lack of Inventory frustrates some potential buyers.

Written by Michael A. Foote, CMB on . Posted in direct lender, Lending, mortgage banker, mortgage broker, mortgage finance, purchase loan, Real Estate

home-value-photo-1I read all day long. Working, researching, learning, creating ideas and developing game plans from that reading.

I’ve come to a conclusion today.

The surest way to get your offer accepted, is to go to the listing agent and have them represent you too. Yes, I know that’s crazy. How can an agent be completely unbiased and neutral while still providing you the protection you need when he is representing the seller too?  The short answer they can.  And what protections are we talking about? Laws, Compliance, Disclosure. A Realtor most likely won’t try to pull the wool over your eyes anymore, as there are VERY punitive actions if they do. And if you read your disclosures and research your property you’ll be fine.

The market is totally digital now.  Aside from actually walking through a property, everything is mostly online.

Realtors spend the VAST majority of time looking for listings. They typically don’t look for Buyers and furthermore don’t prefer to work with Buyers as the time spent with a Buyer is usually substantially higher than working with a Seller. And in a tight market, it is much better to have a listing rather than buyers if your the Realtor. Although they like to have both of course.

So think about it. There are multiple offers on each property. The listing agent has to look at them all and determine which are real, which are well qualified, which are cash and/or financing, which are too low, and which are too high with financing… and more importantly is the offer from HIS/HER Buyer is the mix.  And remember the Listing agent in theory is not allowed to tell other prospective buyers what the other offers are at price and concessions wise.

All offers are required to be presented to the Seller. That is the truth. Are they? Who really knows. Let’s assume all offers are being presented to the seller. If you were the Listing Agent and you have to present all the offers including his/her own, whose offer do you think gets pushed and sold hardest? I mean we are talking almost double the commission in this scenario.

To add on to this further, if you are financing your property? You should try to use the Realtors Lender as well. The Listing Agent knows his/her Lender. They work together, they close deals together, and more importantly they KNOW and BELIEVE what their Loan Officer says about a Buyer. And TRUST that their Lender will make sure the loan closes. And ultimately, the Realtor wants to close the deal and get paid. Realtors and Lenders don’t get paid a hourly rate usually, they are paid 100% commission.

So if you LOVE a property and aren’t being represented by a Realtor already… I highly recommend you contact the listing agent, get pre-qualified by their Loan Officer and submit your offer as soon as possible. I think you’ll be happy you did.  

In my opinion this theory only works for markets that are highly desirable and active with low inventory where multiple offers are the norm.

Michael Foote, CMB

Certified Mortgage Banker

www.MichaelFoote.com

Licensed Real Estate Broker #01149645, NMLS 235435 & 1059372