Why Would I Want a Stated Income Loan?

Why Would I Want a Stated Income Loan? - My loan officer says we are doing a stated income loan. Why dont they want to see my tax returns or pay stubs?

Stated income loans are much easier to close than full doc loans.

One example of a reason that you might need a stated income loan is if you are self employed, and claim significant tax write offs to minimize your taxable income. While this is good for your tax status, most lenders will not be able to use your "real" income and base your debt to income ratios on your taxable income.

Do you have very high credit scores? If so, many lenders will allow you to use a stated income program with little or no increase to the interest rate. High FICO customers are seen as a low risk to lenders so lenders often reduce the burden of gathering documentation in order to earn your business. If you have very high credit scores you should ask your mortgage broker if a stated income program is right for you.

Stated Income mortgage is ideal for home buyers with incomes that are difficult to document. People who receive a good portion of their income in the form of cash tip, such as waiters, taxicab drivers and street vendors may not have paycheck stubs to prove their true earnings. Stated Income loans are created with these homeowners in mind.

Stated income loans should NOT be used to exaggerate your income. If you use a stated income loan to claim you make more money than you do, you are committing mortgage fraud.

Any and all sources of income that is un-documentable would be taken into consideration for a stated income loan. Side jobs where you are paid all cash, is an example of money that would be considered.

Many of those who would not have qualified on a Full Doc Loan will have the option of going with a Stated Income Loan.

Stated income loans are for document relief and not to be used as a way to qualify for a loan in which you cannot afford by falsifying your income. Qualifying for a loan by way of the stated income program can put you in a very tough financial situation if you are not honest with your true income.

An alternative to stated income loans is by using bank statements to qualify as income. Stated income and bank statement loans are there for non traditional income sources and should not be used just for anybody.

Stated Loans give a little more flexibility when it comes to particuarlly income. With more flexibilty does come more requirements particularly from the credit score necessary to qualify.

Often you simply don't have a choice. Sometimes a stated loan is the only way to make a peticular loan work. If this is the case with you, make sure you understand exactly what is going on with your loan and why your having to go stated.

Can wage earners get stated income loans? - Stated income loans used to be for the self employed or hard to prove income. That is not the case anymore.

You can use a stated income loan for any income that you can't or do not want to provide income documentation for, including wage earners.

The amount of income you state has to make sense for your profession. For example you cannot say that you work as a cashier at Wal-Mart and make $300,000 a year. Underwriters normally use a website such as Salary.com to check the average salary for a given profession in a specific geographic area.

Wage earners can get stated income loans but there may be more restrictions, higher rates, and lower loan to values. Wage earners that use stated income loans usually have other income that is hard to document.

The point of a stated income loan is for borrowers that have difficulty PROVING the income. Make sure with a stated income loan, that the mortgage payment you will receive will be something you can live with in the future.

Some lenders permit Salary employees to get stated income loans

Will Stated Income Work for You? - A stated-income loan qualifies a borrower using the income the borrower states on the application form - as opposed to the income the borrower can document. With a stated income loan, the lender agrees not to attempt to verify the income the borrower has stated on the application.

You may have to sign a statement of understanding so that you are not misleading the lender into believing that you are making more money than is true.

One of the reasons for a stated income loan is to minimize paperwork during the loan application process. A number of requirements that would normally be requested are W2 Statements, 1099 Forms, Bank Statements, and Pay Check Stubs. A stated income loan would not require the borrower(s) to find and organize this information to be approved for a loan. In many cases the interest rate difference is very minimal but normally slightly higher than a loan which requires proof of income.

On some stated income programs, the lender may require the borrowers to complete and sign Internal Revenue Service form 4506. This form gives the lender permission to access past and future tax returns of the borrowers. Having a signed and completed 4506 form in the file greatly enhances the marketability of the loan to the secondary market.

Some times this loan program has been referred to as "The Liars Loan". It is important to understand, the existance of this loan, is for the purpose of helping borrowers, who otherwise cannot document their Actual Income. It is not designed to ficticiously inflate your income.

Stated income may be used in lieu of full documentation if you have higher credit scores. Lenders view you as less risky and therefore are willing to dismiss income documentation to speed up the loan process. The rate you receive is contingent on specific loan to value and/or down payment restrictions.

Stated income mortgages are ideal for the self-employed and for home buyers in professions with salaries comprised mostly of cash tips, such as waiters and hotel porters. This type of loan applicants can often afford a mortgage, but don't have the necessary pay stubs to document their true earnings. Self-employed business owners whose personal assets are comingled with the business assets often utilize "Stated-Income Stated-Assets" mortgage programs.

Lenders will often check with widely-availalbe salary survey sources like salary.com to determine whether or not the income stated is consistent with the borrower's profession and title.

You are responsible for providing an accurate figure when the loan officer ask's for your income amount. The loan officer should not coach you or fill in the amount for you. If the loan is audited and fraud is discovered you and or the loan officer can be held accountable uner the law.

For some people a no ratio loan or a no doc loan may be the best route to go (instead of stated income). On a no ratio loan an income figure is not filled in on the loan application and no debt ratio is calculated. On a no doc loan, there is no employement filled in, no income listed and no debt ratio is calculated. These types of loans are higher risk loans and higher rates are usually associated with them. However, some people may have income that an underwriter will not accept for one reason or another and these options may be the better route to go. Temporary disablitly is usually an income that can not be used. Also a person who jumps around from job to job, has large gaps in between jobs, switches their line of work constantly and has no job stability may consider one of these types of loans.

Employment will most likely be verified, the income stated will have to be make sense with the type of job submitted on the application.

With the use of automated underwriting borrowers with exceptional credit that meet other loan criteria can get a stated income loan or no income verification loan with the same interest rates and fees as borrowers who do provide income verification.

Though the stated income loan is an attractive loan for many self employed borrowers, always remember that many of the deductions that you take on your business taxes can actually be factored right back into your income for mortgage underwriting purposes.

A stated income loan is a great loan for people who are W-2ed or self-employed. There are also programs that allow stated income and stated assets on the same loan. These programs help to preserve borrower’s credit by getting them the funds that need when they need them.

Mortgage Broker | Buying my first home | Can I get a loan if Im self employed | For Sale By Owner Tips | What should I ask a realtor before I hire them | Home Equity Loan for Condominiums | Luxury Home Loan Financing | 1031 Exchange | Why Would I Want a Stated Income Loan | Lease-to-own purchase | Hard Money | Interest Only Mortgage | Consolidating Debt - Refinance or 2nd Mortgage | Should I refinance my ARM to a fixed rate | Creative ways to buy a house | Below 500 Refinance | 100 Mortgage Loans | 40 year mortgage

Apply Now! І Borrowing Power І Credit Issue's І About your Privacy