Alternative Financing: Stated Income
Although getting a loan as a W-2 employee may be cheaper and easier to obtain compared to being self employed, you do not have to go running back to your W-2 job to qualify for a mortgage. Lenders might be concerned with the fact that you are not receiving a steady flow of monthly income to meet your mortgage obligations, and others might simply not want to deal with the additional paperwork involved with lending to the self employed. But there is no need to worry, because there are mortgage loan programs out there designed for these borrowers as well as steps one can take to become a more attractive candidate for a mortgage loan.
As someone who is self-employed, lenders might not view you as the ideal candidate for a mortgage. The subprime mortgage crisis has made it more difficult f less than ideal borrowers to receive mortgage loans from a bank. However, there are lenders that provide loan products that cater to this class. One type of alternative financing in this class is the stated income loan. More specifically, the SISA (stated income/ stated assets) loan is a type of mortgage that is based on the amount of income that the borrower states they make. The lender will not verify the income, although the lender will usually verify employment history to legitimize the stated income amounts. Stated income loans are also called “low-documentation” loans. The bank may also want you to submit an IRS Form 4506 or 8821. Form 4506 is used to request a copy of your tax return directly from the IRS, thus preventing you from submitting falsified returns to the mortgage company, and costs $39 per return.
For more information about stated income loans, contact the specialists at HML Investments today.