No Doc Stated Income Loans
If you own your own business, are self employed or get most of your income from commissioned sales, then you have probably run into trouble when applying for credit. Specifically when you are looking for mortgage refinance options you have difficulty being approved because you can't prove your income by traditional means. Financial institutions are beginning to realize this problem and are coming out with unique solutions called stated income loans and lines of credit.
A stated income HELOC doesn't require that you supply the usual paperwork that states how much money you make a year. You advise him or her what your annual income is and they use that number at face value. Then when you are approved you can access the equity you have in your home via a lone of credit.
Small business owners are able to reduce their taxable income by claiming legitimate business expenses. This presents a problem when it comes to qualifying for loans and mortgages as their taxable income often falls below what is required to be approved for additional credit. The stated income lending products resolve this.
The lender does not ask to see pay stubs, W2s or other income documents. What they require instead however is very strong credit. Your credit rating needs to be well above average to offset the additional risk the lender takes by not verifying your income.
Interest rates and fees on stated income loans are often greater than on usual loans. This helps to offset some of the increased risk the lender takes as well. All in all, however they are by no means excessive.
Some financial institutions will also put criteria on how long the applicant needs to have been in business. The may also include other factors such as payment shock, where the new payment can not be more than fifteen percent of your existing shelter payment. Essentially, because they are opening themselves up to additional risk by not verifying income, they endeavor to ensure that you are as strong as possible in all other areas of the approval criteria.
You can meet with a broker or search online for a mortgage lender that offers stated income products. It is encouraging to know that the financial institutions are taking the unique needs of the small business owner seriously. You might just have to work a little to search them out.
A stated income HELOC doesn't require that you supply the usual paperwork that states how much money you make a year. You advise him or her what your annual income is and they use that number at face value. Then when you are approved you can access the equity you have in your home via a lone of credit.
Small business owners are able to reduce their taxable income by claiming legitimate business expenses. This presents a problem when it comes to qualifying for loans and mortgages as their taxable income often falls below what is required to be approved for additional credit. The stated income lending products resolve this.
The lender does not ask to see pay stubs, W2s or other income documents. What they require instead however is very strong credit. Your credit rating needs to be well above average to offset the additional risk the lender takes by not verifying your income.
Interest rates and fees on stated income loans are often greater than on usual loans. This helps to offset some of the increased risk the lender takes as well. All in all, however they are by no means excessive.
Some financial institutions will also put criteria on how long the applicant needs to have been in business. The may also include other factors such as payment shock, where the new payment can not be more than fifteen percent of your existing shelter payment. Essentially, because they are opening themselves up to additional risk by not verifying income, they endeavor to ensure that you are as strong as possible in all other areas of the approval criteria.
You can meet with a broker or search online for a mortgage lender that offers stated income products. It is encouraging to know that the financial institutions are taking the unique needs of the small business owner seriously. You might just have to work a little to search them out.
About the Author:
If you are self employed, get more information on the home equity line of credit stated income at Pat's mortgage blog.
posted by Debt Consolidation Loan at
8:36 AM
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