Self-Employed Bank Statement Loans in SoCal


– Hey there, my name is Teresa Tims and I’m President of TDR Mortgage. I serve the entire California market. I’m here with my business
associate Ms.Fox. – Hello.
– Such a cute name. – Thank You.
– Ms. Fox. Did you get teased when you were little? Like, did they call you foxy mama? – Well, my middle name’s Roxanne, so they called me Foxy Roxy.
(laughs) – Oh my God, how cute is that! Okay so, getting back to why we’re here. We’re gonna talk today about helping self-employed
borrowers buy houses. – Absolutely. – And one of the common things that self-employed borrowers do, is they run off all of their
income, right, Heather? – They do, yes. – So as an alternative
to doing a traditional tax return qualifying, we’re here to talk about business bank
statement-qualifying home loans for self-employed individuals. And when we’re looking
and evaluating someone to buy a house with
business bank statements, we’re looking at three, 12 or 24 months, complete pages to the
bank statements, right? – You’re correct. – And when we’re evaluating
these bank statements, Heather, what is the lender looking for? Lender’s a wholesale representative that works for a wholesale lender that serves the broker
community, which is me. So she’s my liaison and she helps us put together complex
scenarios quite often. But when those bank statements
go into the lender, Heather, what are they looking for? – I mean, they’re looking
for consistency, right? They’re looking for deposits, business income-related deposits
in their bank statements. We wanna see that a borrower is consistently putting business income in for the amount of months
that we are doing. So for example, 24 months, we would like to see consistency
throughout 24 months. If it’s 12 months,
consistency throughout that, three months, consistency throughout that. – Okay, so what if, why
would somebody do 12 months, three months or 24 months? Like, why would I just give three months? – I mean really, it just
shortens the documentation. – Okay. – So I mean– – That gives you better
pricing if you do more– – It does. – The more information you give– – The lower the rate.
(laughs) – You know, if we’re
doing the full doc loan, obviously you’re gonna
get, right now it’s 2020, you’re gonna get rates in the threes if you’re putting 20% down,
versus rates in the fives with the business returns. – Correct. – Now, a lot of times business returns are extremely complex. I think most business
owners have a minimum, you know, 10 to 15 page,
maybe 20 or 30-page statement. So you mean to tell me you’re gonna look at every deposit the business owner makes? – We absolutely are. – Ugh, that sounds like a lot of work. So who does that? – My underwriters do it. I actually prescreen
them, so I’ll look at ’em. – So you’ll just peruse the statements? – Correct, yeah. – As a loan officer, what
I’ve come to know is that if I see consistent deposits,
I really don’t question it. It’s like, okay, this
person is a drywaller, he’s a contractor. So I see all these
miscellaneous payments go in and then if I see a very large deposit, like $100,000 deposit, to me, I’m gonna, I wouldn’t know necessarily
to question that ’cause I just think, oh,
here’s the bank statements, you gonna just qualify him. But what I’ve come to know is
that’s not the case, right? – That’s not the case. – Why not though? – Because we need to make sure
that it’s business income. – Okay. – Yeah, so if he does have something like a $100,000 deposit, what is it? Is it a job? Is it a big job? Maybe he did something more,
but it was business related, we’re gonna wanna source that deposit. – Okay, so on the business
bank statement front, if you are in a habit of, let’s say you get paid in cash or check and maybe they don’t write
it off to the business, maybe they give you the cash or maybe when you get paid, that you put it in your
wife’s account or you, wherever you keep it, if you wanna qualify using
your business bank statements, you need to be depositing consistently, your money into the bank. We’re going to need to verify and validate that you are an active business
via a business license. There’s all kinds of QC’s in these loans, so even though you’re just qualifying with your bank statements,
it’s still is a loan that they, I find, go through with
a pretty fine-tooth comb. – They do, absolutely, yes.
– Right? Okay, so with large
deposits being questioned, if you are sitting at home
and you wanna find out what income can be used, all
you have to do is sit down and tally up your statements. – Now, Heather, if you get
a little bit better break on the rate, let’s say in 2018 you made, let’s just say you had
200,000 of deposits, ’19 wasn’t so good and so
you have 100,000 deposits. So then, would you still give me, would you still plan on
giving the lender both years? Or really, you’re just gonna give ’em the most recent one year? Or how does that work? – No, I mean, it’s averaged over 24 months starting from the most recent month. So it would be from
January back two years. And we would average it, that month.
– Okay. – So I mean, whatever years,
how many you’re gonna want, we’re gonna do an average of the month prior to you submitting. Because obviously that
would be the bank statement that we would have, right? – Okay, well I would think
like, I maybe wouldn’t even show that I did better because
if I have declining income, do business owners have to worry about this variable declining income? Should that be a consideration when they’re looking
to qualify for a loan? – Right now we’re not doing
that, in the past we did, but right now we’re taking an average of the 24 months’ bank statements. – Wow.
– Yeah, which is– – That’s aggressive.
– It is. – So if somebody–
– Because virtually it’s just a straight 50%
expense factor automatically. – Okay, there you go, right? So she just said that
you’re not getting 100% of the deposits that you’re
putting in, and why is that? – Because we need to assume
some sort of expense factor, there’s gotta be some sort of
expense for doing business. So we’re just gonna take 50% and assume that they’re
gonna have 50% in expenses. – An exception can be made when you’re, let’s say for example,
you had mentioned before, if you’re a consultant,
you work from home, you don’t have employees,
you don’t have products. We can sometimes use a CPA expense letter where this person is stating, hey, maybe your expenses
aren’t 50%, they’re 10% or 11%, and then you can qualify with
90% of your deposits, right? – Absolutely.
– Okay. – As long as they say that
their expenses are 10%. – Okay, so I’m trying to think
of any other tips or tricks. Mostly what you want to do is contact me and do an on-the-phone
consul, so I can point you and guide you in the right direction. And oftentimes, it’s
just a simple analysis of your bank statements and you can send those
securely on my website, you can Dropbox me a link or you can even stop by the office. You know, we still do
this old-fashioned thing of like, meeting our customers in-person here at TDR Mortgage. Heather, did I forget anything? Did you have anything else that you wanted to let my viewers know
about when qualifying for a home loan using
business bank statements? – I think you covered everything. – All right, well, for
information on buying or selling, buying, selling or refinancing
in Southern California, pick up the phone and give
me a call at 909-920-3500. And you can find me on the
web at tdrmortgage.com. I’m looking forward to hearing from you. Thank you Heather!
– Thank You. (relaxing music)

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