Mortgage – A Quick Guide to Stated Income Financing

The mortgage industry has practically seen a particular explosion of new loan packages catering to the needs of just regarding anyone. Stated income financing is 1 such option.

One pertaining to the great aggravations of getting a loan for a home is the paperwork. Frankly, it makes doing your taxes look simple. If you fall short on any pertaining to the documentation, you might run into real problems getting the loan, even if you have great credit. the is particularly true for 1 group of people.

If you are self-employed, you probably already know that applying for loans is a nightmare. The problem? Proving your income. Lenders run a number of calculations at the time evaluating loan applications. Many pertaining to the calculations use your income as 1 pertaining to the factors. As a self-employed person, the might be problematic. Simply put, how do you prove your income?

Traditionally, lenders have asked to see your past tax returns. While helpful, tax returns do not show the true situation. Your business income is usually shown on Schedule C pertaining to the tax return. The numbers, however, might be deceiving because they tend to include deductions that don’t actually reduce the amount you are taking home each month. 1 such deduction is depreciation.

So, what do you do? A relatively new loan program tailored to people that have problems showing income is the stated income. the loan is pretty much what it sounds like. You provide your income figure including the address pertaining to the property you are interested in. The lender then pulls your credit report including makes a decision on whether to loan you the money. Pretty simple, eh?

While stated income options are great for many self-employed people, there is a cost. The lender is forgoing a lot of information, so it tends to view the loan as more risky. Given this, you might expect to pay points on the loan as well as a higher interest rate than published with documented loans. How much? It depends on your situation including the lender.

If you are self-employed, the good news is there is a mortgage program for you. The key, of course, is to figure out if it makes financial sense.