by Mayer Dallal
Whether your own personal domicile, a vacation home, or an investment property, a home loan is a significant commitment. It comes with legal obligations and contracts, not to mention a years-long agreement to make payments on the property. However, not all lenders are alike, especially when your income doesn’t come from a normal 9-to-5 punch-the-clock type of job.
For more Americans than ever, non-traditional earnings are claimed at tax time through 1099’s of various types. Professional positions choose to take large bonuses rather than steady income throughout the year. Contractors earn a great living, but the checks aren’t consistent. Yet, each of these client types want – and deserve – to buy a home. Yet, the traditional mortgage loans don’t fit their needs.
What’s wrong with traditional mortgage banks?
The typical mortgage bank or credit union is a branch of a lending institution where you make your deposits and keep a checking and savings account. A board of directors governs their practices, and the representatives that work for the bank must follow the prescribed terms and conditions. And since boards don’t like risk, the vast majority of mortgage applications that get approved are for FHA loans that can be resold.
To resell a mortgage requires certain property and borrower criteria. The property must pass an inspection to qualify, and the applicant must qualify using the usual blend of credit score and income, along with documentation to verify it. The documentation, typically tax returns, pay stubs, and W2s, are the type that traditional earners receive, precluding the contractor, self-employed, freelance, and some professional positions. And for those who can qualify, exorbitant monthly payments with high interest rates and substantial down payments are common.
What unconventional earners need
For earners who write off as much as possible to lower their tax payable, plus those who are self-employed or collect inconsistent income, credit unions and banks with teller services aren’t a great fit. The same is true for real estate investors who borrow money to renovate to either flip or rent out a less-than-perfect home that doesn’t fit FHA criteria.
There may be options if it’s only a small loan amount – options like home equity lines of credit or carrying the debt on a credit card – but that’s certainly not ideal and has higher interest costs. Rather, they need a mortgage lender that will dig deeper than the superficial documents to determine whether the property truly is affordable and if the applicant can make the payments.
That’s where a mortgage bank comes into the fray. Rather than deal with corporate boards and politics, they serve the customer first based on the merits of the application. A mortgage bank seeks to provide a way with competitive mortgage rates, a suitable loan term, and qualifying criteria that can be verified outside of the normal documentation. In most situations, bank statements are enough to determine an approval.
When does a mortgage bank benefit the buyer?
MBANC is a mortgage bank that’s intent on serving qualified buyers who often fall outside the normal criteria. Our services appeal to a huge range of home buyers and investors, and they’re beneficial when:
- You have a property that doesn’t fit FHA loan criteria. That can be rental units that need renovations or a jumbo loan that exceeds FHA loan limits.
- You don’t receive consistent income. If you rely on bonuses, project payments, 1099 income, or anything else that doesn’t generate a W2 or pay stubs, our mortgage bank serves you.
- You aren’t a permanent American resident. FHA loans aren’t available for foreign nationals, but MBANC has lending options to help.
- You are a business owner. When getting creative with income tax is part of your vocabulary, it gets more difficult to get approved for a traditional mortgage.
Want to know more about the mortgage bank services we offer? Our products and services include adjustable rate mortgages (ARM), fixed rate loans, and all of our products are eligible for a 10-year Interest Only period with no balloon payments. Call us today to find out more.