Stated Income Mortgage Options Are Available To Those Who Cannot Document Their Income
Many people who are self-employed find that they are unable to provide the legal documentation of a W-2 which can make it very hard for them to prove they have the income they say they do to a mortgage lender. This is also true for small business owners and people who work off of commission, which is why there is a separate type of loan option, called a stated income mortgage which tends to work best in their cases. A stated income mortgage does not require documentation that you make the amount you claim to, although often times the source of your income will be verified so you should not think this will work if you are unemployed. Additionally, if you are thinking about taking a stated income mortgage you will have to be able to verify any assets that you may claim as well as have at least a medium credit ranking since this helps prove that you are not a high potential risk to the lender. The advantage of taking a stated income mortgage instead of a no doc mortgage is that typically you will only have to pay 2% more for your interest rate than if you took a conventional mortgage. Thus, if you are self-employed this is typically your best option for taking a loan if you can verify the sources from which you receive your income. However, if you are over the age of 62 and you are looking to take out a 2nd mortgage as a stated income mortgage you may find that looking into a reverse mortgage that does not require you to take make monthly payments may be in your best interest. Also, you may find that variable interest quotes may be a better mortgage choice than fixed interest rates since you will still have higher interest rate quotes. Additionally, the amount you make towards your down payment will have a significant role in determining how high your interest rates end up to be on a stated income mortgage. Due to the fact that a down payment makes you a lower perceived risk to lenders, if you place down 15%-20% of what is due instead of the 5% that most lenders will require, you will likely only end up paying an eighth to a quarter more in interest than if you took out a conventional mortgage. In order to figure out what you can afford and what house will best suit your needs since a stated income mortgage is more flexible in terms of what you will be offered, you may want to head online and find a mortgage calculator to help you find a mortgage that will be affordable even with the added interest rate. Many people who have to take a stated income mortgage may be inclined to purchase a lower priced house than what fits into their budget simply so that they can afford the increased interest rate more comfortably. Most importantly, remember that while it may be tempting to lie about your income, the consequences of receiving a stated income mortgage you cannot afford which only ends in default, so be careful when you enter this agreement.
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