Stated Mortgage Loan: 3CALoan
In Stated Mortgage loans, the lenders do not check the borrower’s income by looking at their income tax returns, W-2 forms, pay slips, or other records. The borrower states his or her income. Consequently, the lender trusts this information. It is also known as no doc loans.
Things to know about Stated Mortgage Loan
Stated mortgage loans went away for quite a while the industry recovered. Earlier they were known as Alternative Documentation loan. Here are some things you need to know about this loan type before you opt any loan program.
Stated Mortgage loan has a Different Meaning
A stated Mortgage loan is completely different from it was in the past. Years ago, in the stated mortgage loan, you were able to take a loan just by stating your income. You didn’t require to prove your income by providing any paystubs, W-2s or tax returns. Simply, If you had a good enough credit score then the lender would pick up the income that you had stated on your loan application. But today, you still need a good credit score in order to qualify for the program. You still have to verify your income, but in a different way by providing bank statement rather than paystubs, W-2s and tax returns. No matter what loan program you use, lenders must use the bottom line income you claim on your tax returns. If you claim fewer expenses, your bottom line income can be high to qualify. The lender can verify receipt of your income through your bank statement on a regular basis. The lender can average your income with few years of statements, and use it for qualifying purposes without your expenses.
A Large Down Payment is Necessary
In the process of down payment, every bank has different requirements. Most of the lenders require a 30 percent of the sales price as down payment. To reduce the level of risk, lenders require the larger down payment that stated mortgage loans pose. These loans pose a larger risk to the lender, even with the alternative verification of your income. Sometimes, lenders require several months of assets with the large down payment in order to have a backup should your commission or self-employment income decrease. Every bank differs in the amount of reserves they require, but 6 to 12 months is the general consensus with most lenders. You can also use your bank statements which you provide for income verification to verify for the down payment and reserve money. In order to ensure that the money is yours, lenders want to see 12 months of your bank statements. The bank will check every deposit made in the last twelve months in your account to ensure that it is related to your income and is not money from an outside source to make your account better to qualify.
You Need a High Credit Score
Lenders want to see the borrowers with a good bank statement because stated mortgage loans are little risky. For a good bank statement, you have to make your payments on time, you don’t have judgments or collections and are not over-extended on your available credit. Every lender requires a different credit score. Some lenders want credit score one over 700 but some lenders are satisfied with a 680 credit score. If you want to apply for a stated mortgage loan, you should start working on your credit from the 2 years before you apply for a loan. You should pay attention to the utilization of your credit and also to the credit history of your bank account. In two years of preceding the loan application, your all payments should be on time. If you have a late payment, make sure that you get current as soon as possible because Lenders like to see your utilization rate no higher than 20 percent.
Lenders will Verify your Employment
Lenders will still verify your employment in the stated mortgage loan. This is another level of protection, to help the lender to determine you are employed. The type of verification will set according to the type of work you do:
Self-employed borrowers
For self-employed borrowers, the lender will require verification from a third party such as your CPA. As you work for yourself, a letter on your CPA’s letterhead stating the business you had started from which date and verifying that you currently operate the business is enough.
Commission based borrowers
If you receive commission rather than a salary for the work you do for someone else, a standard Verification of Employment suffices. Most lenders will satisfy over the phone verification with the employer or they accept a written VOE form. Sometimes, a lender may allow you to provide your business license as proof of your employment.
Final Thoughts
Stated mortgage loans are still available and can offer a large number of people that are self-employed a mortgage once again. When you shop around for lenders that offer this program, make sure to ask about their requirements. This way you know that you are able to meet them before you settle for a lender. This way you know all of your options and can secure the mortgage you need. These loans are perfect for you if you aren’t interested in showing your assets or income. You will get this loan very easily If you have all positive attributes. If you have questions about this program, you can contact us at 818-322-5626 or (818) 3CA-Loan today. It is possible to get stated mortgage loans today. Take the time to contact us right now!
Real Estate Blog DirectoryblogvilleiBegin
