stated income loan
In the past few years the mortgage sector has seen a spurt in various types of loans being issued in order to make things easier for those interested in a mortgage loan. One such type of loan is the stated income loan. This is nothing but a mortgage loan which does not require the borrower to provide endless amounts of documentation stating your income, in order to qualify for a loan. In short, a stated income loan makes the process easier and more convenient especially for those individuals who find it difficult to document their income. The stated income loan makes it easier for those who are self-employed or have a source of income that is mostly commission based. However, it must be understood that the facility provided by such type of processing does not imply that the stated income loan encourages people to hide their income or their sources of revenue generation.
Processing of loans become easier through stated income loan
In case you are self-employed, you would have faced the problems of documentation while applying for loans. Proving an income source or the exact amount becomes difficult for those who are self employed or have an irregular source of income. Most lenders ask for exact figures of income when evaluating loan applications. Many of the calculations used to decide o the loan amount or duration need figures which might e difficult to procure on the part of such an individual. In such cases, stated income loan provides the much needed relief from such documentation, hence it has also been often called as the No doc loan.
A stated income loan can be helpful at times when a person finds it difficult to prove in complete accuracy the details regarding ones income. There are many people who have their seasonal incomes. This is especially seen with business men owner, or at times with those who have different incomes at different times.
Measures for stated income loan
Those who apply for a stated income loan are required to state their incomes within the mortgage loan application. The figure stated here is used by the lender to ensure that you are eligible for the loan. Though a stated income loan does ask for income documentation on the part of the borrower, you have to provide proof of your employment, which could be in the form of a business license or any such other documents that state your nature of income. Apart from this, the income that has been stated by you on the application should be reasonable and in keeping with the kind of work and income expected in such a business.
Most borrowers with almost any credit standing can actually qualify for a stated income loan. In order to qualify, for such a loan the borrower has to have a minimum credit score of at least 580, though it might vary for various institutions or different lenders. However given the nature of the loan it is considered more risky than traditional loans, hence a stated income loan generally levies a higher rate of interest than that of a properly documentation version.
In order to qualify for a stated income loan you have to provide the borrower with your income figures and also the details of the property you are interested in buying. On evaluation of your credit record, the lender will then decide whether you can get the loan amount or not.
Some advantages of stated income loan
- An advantage of a stated income loan is that here the lender does not attempt to verify the income as stated by the borrower in the application for the loan.
- The stated income loan is good for those home buyers who actually are capable of affording a mortgage and have a more or less stable credit record, but cannot meet the traditional documentation procedures that are necessary part of loans that need complete documentation.
