Stated Income Lending
While the real estate mortgage market forecasts and opinions are constantly in motion, one thing is true about the mortgage market today: stated income lending is becoming more and more prevalent. Reemerging as a popular alternative financing vehicle for lenders and borrowers alike, stated income loans are being utilized as a means of attaining a mortgage on a property in todays appreciating real estate market. Simply put, stated income loans allow borrowers to state their income on the loan application instead of verifying the actual amount by providing pay stubs or tax documentation. This loan method was originally intended or those with conflicting tax scenarios, but it has become more widespread due to the ease in the borrowers ability to obtain a mortgage loan.
How Do Stated Income Loans Work?
In contrast to a conventional full documentation loan, which require the borrower to verify income and assets, stated income loans allow the borrower to simply state their income for application purposes. There are two types of stated income loans; SIVA and SISA. SIVA (stated income/ verified asset) loans allow the borrower to state his or her gross monthly income on the loan application while verifying assets by providing bank statements or similar asset documents. A SISA (stated income/ stated asset) loan allows the borrower to state both income and assets on the loan application as the bank or lender will not verify the information.
In all cases of stated income however, employment will be verified as this pertains to the amount the borrower can state for their income. Reason being that certain careers reap higher income levels than others, this gives the lender a general perspective on whether or not the borrower is being truthful with their stated income figures.
For more information on stated income lending, contact the specialists at HML Investments today.