When I’m choosing topics for my weekly videos, they are usually based on conversations that are coming up regularly for me. Lately, I’ve been doing a bunch of mortgages using alternative documentation programs.
Bank Statement Programs are a Good Option to Consider
The main one I want to talk about today is the bank statement program. If you are buying or refinancing and you have a decent-sized down payment or a good chunk of equity, a bank statement program could be an option to consider.
The difference between a full-rate doc vs. what I could get on a bank statement program was just barely over half a percent. It’s a big deal. But, if the alternative is waiting until you file a few years of taxes, especially when you consider the amount of money you need to pay in taxes to actually qualify, you can quickly see why it makes sense to move forward now.
Let’s Look at the Numbers
We were looking at some rough numbers. You’ll end up paying $60k – $70k in taxes to qualify (assuming you are buying a million-dollar house). This means that you are going to leave money on the table as far as taxes.
To be clear: I’m not telling anyone to cheat on their taxes so they can use a bank statement program. What I am saying is to stay with an aggressive tax plan to keep those tax dollars in your pocket. Yes, your mortgage payment is going to be a little higher. But you are going to pay that payment over time. But with taxes, you will pay it today and every year again and again.
It’s the easiest math in the world to stick with the aggressive tax plan. We can look at options to get you into a bank statement program.
Everyone is Unique
Again, everyone’s situation is different. If you have minimal equity or not great credit, then your options might be limited. But for people who have solid credit and a decent down payment, then a bank statement program if you are self-employed is very likely the way to go.
If you are self-employed or you know someone who is self-employed, I would love to discuss how this works. Let’s sit down and run some numbers and I’ll show you what it looks like. The numbers I was looking at recently showed that it was a 10-year break-even point by choosing to spend money on the taxes today vs. the difference in the payment.
Reach out to learn more. We can crunch the numbers to look at your individual situation.