Stated Income Mortgage Loans
Stated Income Mortgage Loans - A stated income mortgage loan is a great mortgage tool for people who cannot verify all of the income that they earn.
With stated income mortgages, when you are filling out the mortgage application you will still need to provide all of your employment information, however that information is not verified through standard documentation such as: pay stubs, 1099s, W-2s, etc. If you decide to use a stated income mortgage your interest rate will be higher due to the added risk the lender takes.
At any point during the processing of your stated income mortgage loan, the underwriter can request income documents still at his/her own discretion. They may ask for income documents if they deem the income stated on the loan application is not consistent with your job or if they do not feel totally comfortable with your home loan application. There are other types of low or no income documentation loans out there such as, no doc. loans, no ratio loans, bank statement loans, and limited doc. loans.
Stated Income Mortgages are ideal for small business owners and those receiving cash tips as a significant portion of their incomes, such as waiters and cab drivers. In many cases State Income Loan may be the only logical loan option as home buyers in these income situations often have difficulty documenting their incomes.
The lender will verify the rationality of the income stated for the wage earner is through the Salary.com. If you are at a smaller company, re-wording your job title can give you a little extra room to state more income if the borrower needs it.
A stated loan is not an opportunity to inflate or falsify your income in order to purchase a more expensive home then you would normally qualify for.
Stated Income Loans do require verification of the existence of your business or employment. Most states have this information available online. If not, then a letter from your accountant/tax preparer verifying your information will satisfy this requirement.
For stated income loans for employed borrowers, lenders will usually verify that the income stated is reasonable for your occupation and experience level.
Stated Income Loan Crackdowns - Stated Income Loans have become the target of recent scrutiny. In the State of Massachusetts more than half a dozen mortgage brokers have been shut down recently due to "fraudulent" stated income loans. Before jumping head first into this brand of loan it is important to familiarize oneself with the different rules, regulations, and laws surrounding them.
A stated income loan is a loan where you must prove your employment information but you do not need to document or show proof of your income. You will simply state how much money you make on the loan application. Obviously there has to be a catch or everybody would do this if you don't have to waste time finding your tax information, W2's and pay-stubs. The catch is that there is usually a small rate bump added to your interest rate due to the loan being higher risk to the lender. The part of the loan that people do not understand is that a stated loan does not mean you are permitted to lie on your loan application when you are stating your income. You must disclose your "true" income or the actual amount of money you are making each month. When you sign your loan application you are agreeing that all of the information on the application is true and correct to the best of your knowledge. Therefore, even though you are stating your income on the application make sure you are being accurate. If you have any questions about a stated income loan, please ask your mortgage professional if this type of loan may be right for you or if another loan type might be better. There are many other types of loans for people with hard to document income.
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Information listed above is to be used for educational purposes only and is not guaranteed