The Stated Income Mortgage
Finding the right mortgage loan can be a long and tedious process. When it comes to finding a mortgage loan, there are several options. Some of the conventional options for mortgage loans include special state loan programs or federal loan programs such as FHA and USDA loans. In addition, one could pursue more creative alternatives for financing including piggyback loans, wraparound mortgages, and interest-only loans. Furthermore, one could venture down the path of even more specialized alternative financing mortgage programs. This category includes no-doc and low-doc loans geared towards borrowers and investors that lack the means for receiving approval for a conventional loan. Included in this category are stated income mortgage loans.
How the stated income mortgage works
The stated income mortgage is a loan in which the lender allows the borrower to turn in a statement that offers up your monthly income. The stated income mortgage loan is typically pursued by those who are self employed or those whose incomes are largely composed of cash and commissions. The reason being is due to the fact that business expenses may be written off at the end of the year, thus lowering reported income amounts for self employed borrowers. If you want to purchase a home, but your tax returns do not correctly reflect your monthly income, a stated income mortgage loan may be the right program for you.
While the stated income mortgage may sound like a free for all program whereby anyone can inflate their income amounts by merely stating it, it is important to note that many safeguards have been imbedded in recent rules and regulations regarding stated income loans. Today (post 2007 housing crisis) lenders require good credit scores (about 680 or higher) to qualify along with a proven source of income. This loan also holds higher interest rates relative to conventional loan types.
For more information about our stated income mortgage programs, contact the specialists at HML Investments today.