Stated-Income

What do You have to Know about Balloon Mortgage?

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Homebuyers who are looking for short-term financing loans may consider taking a balloon mortgage.

It is an excellent option if you what a mortgage with a term that shorter than 15 years. A balloon mortgage usually has a 5- to a 7-year term with a payment that is similar to that of a 30-year term mortgage. This means that if you can handle the loan well, you’ll be mortgage-free much quicker.

Let’s understand how a balloon mortgage works and tackle its pros and cons. This will help you decide if this financing works for you.

How does a Balloon Mortgage Work?

It a type of short-term home financing where a borrower has the option to make lower monthly mortgage payments for a specific period of time. Then, the remaining balance must be paid off within a relatively short period toward the end of the loan term.

A balloon mortgage can be in a form of a partially amortizing mortgage or interest-only loan.

Advantages

The biggest advantage balloon mortgages offer is it often carries a lower interest rate than most conventional loans. This allows the borrower to ramp up his savings which will come in handy by the end of the loan term. With a balloon mortgage, you may also get a larger loan amount compared to a fixed-rate or an adjustable-rate loan.

If you’re not earning a lot of money now but are expecting to have a higher income in the near future, a balloon mortgage can be an excellent option for you to start on you homeownership plans. You no longer have to wait for that expected salary increase before you can buy the property.

A balloon mortgage can also be beneficial for homeowners who aren’t planning to stay on the property for long and are planning to make a profit by selling it. They may have the option of selling the home before the balloon payment becomes due.

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Disadvantages

While a balloon mortgage has potential benefits, this loan may also have drawbacks. There are certain risks that consumers need to consider.

Toward the end of the loan term, the homebuyer will have to pay off the remaining mortgage balance, which can be a relatively large sum of money. The payment has to be repaid in a very short span of time.

This large one-time expense can be financially straining for a borrower who has failed to prepare for this balloon payment. If he/she fails to repay the outstanding balance completely, he/she is at risk of losing the property.

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Clincher

Looking at balloon mortgage’s pros and con, you will be able to determine if this financing is what you really need. To help you make a sound decision, always consider discussing your homeownership plans with a trusted mortgage lender.

The bottom line comes to this — whichever financing you choose, you have to make sure that you can truly afford the mortgage. Make sure you shop for lenders. This allows you to find home financing loans that are affordable and have attractive terms.

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How You Can Generate Extra Money Online

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Who doesn’t want additional cash? It’s one way of boosting your finances. With that extra money, there’s more for shopping, dining out and splurging. There are so many things you can do with the extra cash.

But did you know that that additional income can help you get a more attractive home loan?

Yes, with a stated income home loan, the bigger your revenue the better mortgage you get.

Unlike conventional financing, stated-income loans allow you to purchase or refinance a mortgage without the need for income verification. You just state how much money you make and the lender will take your word for it. They’ll only verify your assets and bank statements to see if you have enough to repay the loan.

Extra Money At the End Of Your Fingertips

In this case, you need to grab any opportunity to make more money than you’re currently earning.

Thankfully, there’s this one platform that makes moneymaking a lot easier, and it’s right at your fingertips — the internet.

Nowadays, it is possible to earn big money online. You no longer have to leave the comforts of your home. You can even do your online job during your office breaks.

Whether you do it on your free time or you devout a couple of hours in a day to sit and work on it, it’s completely up to you.

Here’re four creative ways to generate extra money online.

Monetize your Hobbies and Talents

Do you have a hidden talent? Are there things you are passionate about? If you have a myriad of unused skill set, sell it online!

There are numerous freelancing websites for different people with all sorts of talents. From writing articles to voice over stints, you can sell these talents and make a couple of extra bucks.

There are online websites that create a marketplace for freelance moonlighters who have a couple of hours to spare in a week. Your paycheck will vary depending on the skills, experience and time you can offer. This is a great avenue for professionals who refuse to rely on their primary job as their sole source of income.

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Sell Your Photos

If you’re into photography as a hobby, it’s time you turn that into a money-making sideline.

You can upload your photos, illustrations, and video on artwork stock sites. You can become a contributor to such sites and earn money every time someone pays and downloads your creations for them to use.

Don’t let that camera collect dust. Start snapping beautiful shots, upload ’em and see the money roll in.

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Teach Classes Online

Some people who can’t attend classroom lectures opt to take distant-learning courses. Specific websites hire course instructors to teach these people through Skype sessions.

If you have an extensive background in teaching or you have some kind of a specialized skill, you may potentially earn a lot by becoming a course instructor. Online course websites will be willing to pay you good money for your time and service.

If you have the passion for teaching, this can be a thriving and enjoyable part-time job for you.

Connect with a lender, click here.

Be a Part-time Virtual Secretary

This is one of the most popular online freelancing jobs. There are plenty of clients seeking for virtual assistants who can help them get their day’s task organized.

There are sites where you can sign in and wait for job postings from potential clients. Your rate will vary depending on the type of task and the time you can offer. You may become the virtual secretary of the next Steve Jobs, you’ll never know!

Wrap Up

Adequate income and financial assets open up doors to greater opportunities for housing and personal stability. It’s important in applying a home financing. Homebuyers with adequate funds and stable income sources will most likely get a more favorable mortgage, all other things equal.

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5 Stated Income Loan Facts You Should Know

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Many of us are a lot more familiar with conventional and government-backed loans than stated income loans. Some of us may not know much about it except that it is considered a non-conforming mortgage.

For sure, you’ve come across this term while shopping around for mortgage loan options. Most of us are guilty of shrugging off stated income loans before we even take a little more effort in knowing about it.

But before you make a decision, it is important that we have adequate information about this mortgage loan. Knowing its benefits and drawbacks will help borrowers understand and decide whether or not this loan is right for your situation

Here are the five loan facts you should know about stated income loans:

Each Application is different

In a stated income loan, each applicant submits a “unique” application. No two applications are alike. The mortgage lender will base their underwriting largely on the income you declare and the other documents you can provide.

A stated-income loan can cover many different loan types and underwriting process. However, it is still wise to prepare for the application as shop for different lenders to find a stated income loan with requirements that fits your current situation.

Find the best mortgage rates, click here.

It has many types

A stated income loan has different types. Each has its own documentation process.

A Stated Income/Verified Asset Loan (SIVA) allows the borrower to declare the gross monthly income. No verification is done to check the veracity of this declared income. However, the lender will verify the homebuyer’s assets. To do this, the borrower will have to provide copies of banks statements and other necessary documents that show these assets.

Another type of stated income loans is the Stated Income/Stated Asset (SISA) Here, the borrower declares both his/her income and assets. These won’t be verified by the lender or the underwriter. However, an estimated debt-to-income ratio will be determined using the income stated on the application.

The Process is Streamlined

This is one of the most obvious advantages of a stated income loan. Because the lender doesn’t require an applicant to submit tons of documents for verification, the loan process is cut short.

If there’s one thing stated income loan can guarantee, this that the application can be quick. This saves you a lot of time. This can be beneficial if you’re in for some steep competition with other homebuyers for the same property.

Connect with a lender, click here.

Today’s Stated Income Loans are Much Safer

The stated income loan of the yesteryears was seen as risky loans because you can get financing without any verification for creditworthiness.

Now, some stated income loan will require some sort of verification. A lender will need to ask you of your tax records or any other papers which shows that you can handle a huge financial responsibility. It will allow lenders to check for any mishandled debts in the past.

They may Costs More than Conventional Loans

Stated income loan falls under the non-QM category. While not all non-QMs are risky loans, it is considered inherent because it doesn’t conform to the QM lending standards. For this reason, stated income loans may have a higher interest rate and a larger down payment than QM loans. They may be more expensive than conforming loans. These compensate for not being able to verify the borrower’s income.

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Are Your Homeownership Dreams Far from Reality?

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Do you feel frustrated that your homeownership dreams seem to be stuck in a limbo? It feels like no matter how you look at it, owning a house will forever remain a dream.

Buying a house is a huge undertaking. However, it doesn’t mean that you can never be the homeowner you wish to be. To be a homeowner entails a lot of sacrifices. If you’re willing to do whatever it takes to achieve your homeownership goals, you’re one step ahead of those who are just stuck in dreaming.

Planning is crucial when you want to purchase a house. It is okay to be ambitious, but you have set goals that are realistic, achievable and incongruent to your present situation.

When we set unrealistic goals that are way too high for us, we may end up frustrated after trying so hard in achieving it and fail. But when we set achievable and realistic goals, we can work more easily towards realizing these dreams.

Here are some things you must consider when planning for a home purchase. These tips will guide you in setting sensible and achievable homeownership goals.

Ask yourself, “Where am I in my life right now?

Ask yourself this basic question to self-assess your current situation. Will your present life situation allow you to afford a mortgage? Will a foreseeable life event prevent you from making monthly payments should you take a loan today?

We look at homeownership as though only our finances affect it. However, all aspects of our life will have a huge impact on homeownership.

If you are planning to get married soon, for example, will this help or make it harder for you to afford a house? If you’re working as a project-based employee, are you sure that you will still have enough funds after your work contract ends?

Where you are at this moment in your life and what things can happen in the near future will play a huge role in your home buying journey. Make sure that you are really ready to take on this big responsibility.

Come Up with a Realistic Budget

We all have a vision of the perfect house we want to have. However, we may not be able to afford it.

Instead starting your homebuying journey by looking for a property, consider having yourself preapproved of a loan first. This way, you will know how much money a lender will be willing to lend you. This is when you will start searching for a house that fits the budget. If you do this, there is a greater chance that you will be able to afford the monthly payments until you completely repay the loan.

On the other hand, if you start by finding the perfect home and then try to squeeze out every dollar from your pocket just to afford it, you may just exhaust yourself and your finances just to keep up with the payments.

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Distinguish Needs from Wants

We all have preferences. However, the essentials should always be on top of the list.

Make a rundown of the house features that you can’t live without and the ones you can let go. Prioritize on looking for a property that has those essential features. the house’s additional features should just be an added bonus.

Perhaps, you’re a home-based professional. Would you really need your own home office or will a multipurpose space work just as fine? Or maybe you really like your home to have a sunroom, but is it worth the price tag?

Know clearly your needs and wants. This dictates the kind of house you should get. Moreover, It will set the property’s price.

Do You have Stable Income?

Income stability is very important for lenders. They need to see solid proof that your income and cash flow are stable enough to afford a mortgage.

Home loans typically require you to be in the same job and with the same employer within the last 30 days, the very least. Hopping from one job to another can be a red flag. But if it’s really necessary for you to find a new one, at least try your best to stay on the same field. Shifting into another field of work not related to the previous one will suggest that you’re most likely to start again from square one.

The FHA, on the other hand, is a good example of a loan that doesn’t require this. There’s no minimum employment period in the same position or employer required. However, the FHA will verify  the most recent two years of your employment. You will have to provide a written explanation for any significant gaps and unusualities in your employment record.

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Do you have a stable income but couldn’t qualify for a conventional loan? This can happen to certain people. Some loan applicants may not qualify for a conventional loan due to the lack of some necessary documents to support their income claims.

This is common for self-employed individuals or for those who are earning by commissions. They lack some income verification documents, but this doesn’t mean that they can’t afford a mortgage.The stated income loan can be an option for them. With a stated income loan, a borrower will have to declare their income and the lender will have to take their word for it. You won’t have to undergo the standard income verification process, but the lender will still check for your assets. Of course, you have to be responsible enough to repay the loan completely.

Connect with a state income lender, click here.

 

Final Words

After setting the right expectation and a more realistic goal, it is now time for you to work your way up the homeownership ladder. Start by asking different lenders for the loan rates, down payments and terms.

Shopping for lenders and understanding the available home financing options will help you in finding the perfect program. Once you’ve found the right mortgage loan and the right house to purchase, you are only a few steps away from realizing your homeownership dreams.

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How Much Down Payment Do You Need to Purchase a Condo?

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Families and individuals who chose to live in the city may find it hard to look for a house and lot. Those who plan to move from renting to purchasing a home may consider a condominium unit.

Condominiums are popping up all over urban cities in the country. There are even quite a number in suburban locations. They can be a practical and classy alternative when houses and lots in the city are steeply priced.

If you’re planning to get a condo unit, you can still make use of home loans. However, purchasing a condominium can be slightly different from buying a single-unit home.

When you buy a single-unit house, all of it, including its amenities, is yours. In a condominium, you are only buying a unit. All the other common areas are beyond your control. Some lenders may consider a condominium purchase riskier than buying a house. However, when it comes to down payment, it usually is the same.

Dealing with the Down Payment

When it comes to the down payment for a condo unit, the higher the better. If you put at least 20 percent down payment, it will reduce the risk to the lenders.

This is true not just for condo units, but for all properties. The higher the down payment, the more secure the lender becomes. In fact, a higher down payment benefits the borrower as well.

First, if you put a big down payment, the loans principal balance is significantly reduced.  The amount of money to which the interest rate is applied is lower. Another reason is that a bigger down payment results in a lower interest rate.

For a single-unit house, the 20 percent down payment is enough to reduce your rates. For a condo unit, you will have to shell out an amount that’s 0.125 to 0.25 higher for you to get a lower rate.

If you choose to put a down payment that is larger than the minimum required, there is a bigger chance that a lender will approve your mortgage loan. A larger down payment lowers the risk and shows the borrower that you’re serious about purchasing a unit.

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Is a Large Down Payment Enough?

If you truly want a good loan with the best rate and favorable terms, you have to do better than putting a big down payment.

A stable employment and good credit will put you on a better ground when applying for a loan. A steady employment means you have a stable income. A good credit means you are in control of your earnings and debts. The combination shows your healthy cash flow, thus, lowering the risk further.

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Make Sure Your Condo Association is Approved

What’s the point of having a good loan when your condo association isn’t approved by your lender in the first place?

Condos are different from homes because, in a condo, every unit owner in the area, like you, owns a piece of the condo as well. You own a unit and your control is just confined within the walls of that unit. Everything else that happens outside of it is beyond your control. For example, if many unit owners default on the loan, it can cause the value of your unit to plummet even if you have been paying in full on time.

Almost every lender requires a condo association to complete a questionnaire. This will be the basis to approve the association or not. If your condo’s association doesn’t get approved, you can’t use secure a mortgage loan from the said lender.

Purchasing a condo unit is not impossible. The down payment and the association are two of the important factors to consider when buying one. It is also equally important that you shop for lenders until you find one who is willing to provide the funding.

Remember that a lender will gauge your risk level. Make sure to provide them with all the positive factors that can have a good impact on your loan; anything that can reduce the risk. Some lenders may not be as warm on the thought of condo loans, but there are still many who are willing to provide the necessary financing. Make sure you shop around.

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Stated Income Loans are Safe Loans, Here’s Why

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Family

When some people hear about the stated income loan, they immediately cringe. To them, it is simply a ‘liar’s loan’. In truth, there is nothing to fear about it. A stated income loan is a safe loan. If we have a good grasp of what this loan is, who it is intended for and how it works, we may even appreciate it more.
h2>They are Safe Loans

People often generalize that stated income loans allow scrupulous borrowers to fudge the numbers just to qualify for a mortgage. The truth is there are different types of stated income loans, each has its own documentation type.

SIVA Loan

This stands for Stated Income/Verified Asset Loan. What this means is that a borrower just declares the gross monthly income on the loan application without needing lender verification. However, your assets will be verified. Thus, there will be a need to provide copies of your bank statements or any other documents showing your assets.

In a SIVA loan, the debt-to-income ratio will be evaluated by providing the income figures. This will become the basis for the DTI ratio.

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SISA Loan

This stands for Stated Income/Stated Asset Loan. Basically, a borrower will just state both the monthly income and the assets. The lender won’t ask for any documentation to verify the formation provided. Like a SIVA loan, the debt-to-income ratio will still be generated based on the stated gross monthly income.

Why is it important to generate and establish the debt-to-income ratio? Simply because this is how the lender determines if you have the ability to repay the borrowed money.

The DTI ratio shows how much debt you have compared to your income. If you have a high DTI ratio, this may mean that you are a high-risk borrower. 

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h2>Income is not the sole proof that you can afford a mortgage.

Qualified mortgage loans have strict guidelines and documentation. Failure to provide the necessary income verification will prompt the lender to deny you of a mortgage. However, there are those people who simply cannot provide these papers because they do not have them. This does not immediately mean that they cannot afford to pay the loan back.

Assets can be enough proof. Assets can be reflected on bank statements which show exactly how much money rolls into the account and how much goes out. This will provide the lender a good estimation of the borrower’s cash flow and reserves.

An excellent credit score is sometimes more important than income. Some people may have a high income, but they are buried in debt. This will be reflected on their credit score. If you keep a stellar score, this will indicate that you deal with your debts efficiently. There is also a good chance that you will be paying your monthly mortgage diligently to keep your credit clean.

A stated income home loan provides you the freedom that you cannot get from QMs. It presents homeownership opportunities to people who cannot get conventional financing. The key is to understand its nature and not abuse its leniency.

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Why Do You Have to Scrutinize the Affordability of Your Mortgage?

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Magnifying Lens

You got a call informing you that your bank has finally approved your stated income loan application.

Congratulations! You will finally be able to buy a home of your own.

But before you sign on the dotted line, make sure you have checked on one very important thing – the affordability of your mortgage.

Can you afford your mortgage?

Okay, your lender has told you that your debt-to-income ratio qualifies for a mortgage. The question is, can you truly afford the loan in real life?

When the lender reviews your credit, they won’t be able to see the entirety of your spendings. In it, they will only see bills from your credit card or auto loan and even your student loan. However, they won’t be able to check how much you spend on your grocery and gas, your utilities and other insurances.

Your credit may not be the total reflection of the kind of spending habits you have. It is only you who can truly assess if you will be able to make consistent, full and on-time payments. You have to factor in all the things that may affect the affordability of your home loan.

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The law requires that your affordability is determined.

Your lender is responsible for determining your affordability. This is the law. They have to do so with due diligence by scrutinizing your income and debts.

Not only do they want to make sure that you are willing and able to pay their money back. The truth is they have to do this because if they fail to do so, they may be penalized. Before they will even provide the loan, they will ask you to provide all the necessary documents for them to check your income and debts.

While there are loans that do not require any documents for verification, they are deemed too risky. Stated income loans may be non-conventional but it still requires adequate proof of affordability before it can be originated.

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Rules are rules.

Non-qualified loans do not mean not having any rules to follow. One particular guideline is the Ability to Repay Rules.

With these rules, there is a stronger sense of accountability, both on you and on the lenders part. Gone are the days where you just declare to a lender that you can afford the loan and they take your word for it. You have to show adequate proof that you truly can repay the borrowed money. Stated income lenders will set their requirements, establish that a person can afford a home financing and be accountable for it.

Non-qualified loans like a stated income loan do not work like QMs, where you can sue your lender when you are given an unreasonably higher rate or provided with unattractive terms. You have to understand how your loan works. Moreover, you have to establish that the affordability of your mortgage is well within your means.

Begin shopping for lenders. Make sure you are able to make comparisons between offers. This will help you find a loan that is truly within your budget. Make sure you have all the documentation needed.

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Hitting Retirement? Here’s How You Can Afford A Home

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Senior

You are turning 60 in a year and still, you are thinking of buying that dream house you have always wanted.

You are hitting retirement but you think that by this time, it is hard to qualify for a mortgage because of your age.

What you have to know is that the law disallows mortgage lenders from not making borrowers a mortgage loan because of age. This is under the Equal Credit Opportunity Act.

Qualifying for a mortgage loan after you have stepped out of the working world may not necessarily be difficult, but it can be different. Purchasing a property once you have hit retirement age will demand that you study several factors deliberately.

You have to bear in mind that as you age, your needs change. If you take on a mortgage loan, you will have to carry the burden of making monthly payments in your retirement years.

Experts suggest that if it is not necessary for you to get a mortgage when you are, avoid it. But if you really wish to buy that dream home, there are ways to finance it. Here are the things you need to ponder on before you start sending your application.

Are you willing to make monthly payments during retirement?

When you retire your income may come from social security benefit payments, retirement savings accounts or some investment income. Some seniors refuse to stop working past retirement age.

Your income and reserves may allow you afford a property, but are you willing to make mortgage payments per month for the next 15 to 30 years? Have you considered other expenses that may come along the way involving a lot of money?

The most common expenditures that may compete with your mortgage are those that are health-related. Medical bills and prescription drugs can easily cost you thousands of dollars. If such case happens, will you still be able to continue paying your mortgage?

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Qualifying Using Your Retirement Accounts as Income

Usually, a borrower’s credit and income are used to determine if they can qualify for a mortgage loan. Retired individuals may have a hard time qualifying for a loan because of the lack of income.

Recently, however, retirement assets are allowed as income used to qualify for a mortgage.

Lenders can look at your IRA and 401(k) and lump-sum retirement account distributions as income, but there are some restrictions. Mortgage lenders Lenders may take a senior’s retirement account distributions as income. They can also take a look at the retired borrower’s 401(K) retirement plan and individual retirement account as part of your income qualification.

You have to take note, however, that there are certain restrictions to this. Make sure you ask your lender about it and that they discuss this with you thoroughly.

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Using Your Household Income to Get a Mortgage

It is possible to get a mortgage with the income of your household family members. HomeReadyTM program offered by Fannie Mae considers the income of non-borrowing household members as part of the qualifying income.

Taking a Reverse Mortgage Loan to Buy a House

A reverse mortgage loan allows eligible homeowners who are 62-year old and above to convert their home equity into readily-usable cash.

The money that comes from a reverse mortgage can be used to buy a new property. The good thing about this loan is that it does not become payable unless the homeowner moves out or sells the home. By using a reverse mortgage, you can avoid exhausting your retirement assets in purchasing a new home.

So if you do not want to pay the loan just yet, you may delay moving out if your previous property to your newly bought one. You can choose the previous house as your primary residence. This way, the reverse mortgage does not become due. When the time comes that you decide to move out or sell the old property, you will repay the reverse mortgage loan balance.

These options are just some of the ways you can qualify for a mortgage to buy a new home. Talk to a lender to explore more options on how you can finance a home purchase in your retirement.

 

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A Liar’s Loan is Not Something to be Scared Of

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The term liar’s loan came about when some borrowers came up with falsified information when they were applying for a loan. But even some lenders were untruthful when offering the loan to borrowers. Back then, some loan products opened doors for unethical practices for borrowers and lenders. However, the nature of these loans remain true; to help those who cannot qualify for conventional loans get an alternative financing. Sad to say, some people abused this opportunity and exploited it too much.

No-documentation loans and low-documentation mortgage loans are basically that. Borrowers may qualify for a mortgage loan without having to submit all the standard documents a conventional loan requires. A stated income loan is a good example of this loan type. The borrower simply states his/her income and the lender will take the person’s word for it.

Call it a liar’s loan, but you don’t have to lie to get financing.

The convenience and leniency these loan products offer made it easy for unscrupulous people to abuse. this became rampant until the term “liar’s loan” was coined for such loans. Nonetheless, a no-doc or low-doc loan as created more opportunities for certain people.

Individuals who cannot produce income and asset verifying documents turn to stated-income loans to find financing. These borrowers may have non-traditional incomes sources or have a personal business or are self-employed. Even so, this does not necessarily mean they do not have the money to afford the monthly payments.

Qualifying for a stated income loan is pretty straight forward. The lender will allow you to state your monthly gross income and your assets. The lender, may it be a bank or a private lending company, will not ask you to verify this information by asking you for documents.

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What is verified?

Not having your income verified doesn’t necessarily mean nothing else will be. If you have a job or you work for somebody, the lender may contact your employer to verify your employment. If you are self-employed your lender may verify this by asking you to submit a CPA letter.

Loans like these will care a much higher interest rate than a full documentation loan. It may also ask you to put a larger down payment or will require a higher credit score. This is done to lower the level of risk the borrower has. For lenders, not being able to verify your income poses a great uncertainty on their part.

Per contra, if your situation has made it impossible for you get other loans, a stated income loan may help. You can start shopping for lenders. Knowing the loan offers from different lenders will give you more options to choose from.

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Homebuying 101: Preparing the Paperwork

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When you talk about a loan application, you get babbled. Different lenders require all sorts of documents needed to begin the loan process.

While one lender may differ from another in terms of verification documents, it helps to know that there are certain papers that are common to each. Preparing these ahead will not just save you time, but money and effort.

 

Gather these necessary documents before you apply for a loan:

Proofs of Income

Most lenders will require the most recent W-2 form together with your tax statements. However, some may ask for W-2 copies of the most recent two years.

If you are receiving a paycheck from your company, a W-2 will show how much your income is and the portion of it that went to tax. If you have a business and are employed at the same time, expect to provide copies of your 1099. This will report the different incomes you receive in a year other than your salary. More importantly, these verify the  earnings that you have declared upon applying for a loan and reflects your income trends. These figures will then be calculated by lenders to determine if they should approve the loan or not.

Don’t to go through paperwork? talk to a lender about your stated income loan options»

Federal Tax Returns

The recent two years of your tax returns will also be reviewed. You will have to expect to include all the schedules and K-1’s if it applies. This is important for self-employed borrowers who cannot provide W-2s.

In a stated income loan, it may not be required that you provide proof of your income such a tax return. Providing these, though, if you have them, will strongly suggest to a lender that you are ready to have your income and assets be examined. This may likely increase your chances of approval especially if they find out that you have more than enough reserves.

Credit Reports

Most loans require that you submit a copy of your credit report. Even if lenders may perform their own credit checks and each one has its own minimum credit score requirement, it is beneficial to know your credit score in advance.

By doing so, you will be able to detect any areas that need credit repair before your lender scrutinizes it. You may need to pay off some missed payments, get current on your existing loans, or trace up some fraudulent transactions done under your name. These extra steps may mean the difference once your loan provider takes a look at your credit report.

Anyone applying for a stated income loan needs to have stellar credit scores. If you provide one that’s already blemish-free (thank yourself for doing the necessary repairs in advance!), these lenders will likely approve your application.

Bank Statements

Your lender would want to know your reserves. Expect them to ask for a copy of your bank statements; the most recent and, possibly your old ones too.

Prepare copies of savings accounts, retirement accounts and deposit transactions among others. This will not only show how much money you have in the bank. It can also prove that your down payment was not a gift from non-borrowing household members.

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List of Other Assets

Aside from your bank statements, you should prepare a list of your other assets as well.

This will serve as evidence that you have enough savings and investments to keep you afloat after paying for any down payment, monthly premiums and closing costs. QM or stated income loans alike, the more money you have, the better chances that a lender will be willing to lend. If you will be able to provide these documents, you will have proof that you have other sources of income aside from your loan. If you are an investor with a huge asset, this will work to your advantage.

 

Final Words

True, paperwork takes so much time to do and, sometimes, it gets frustrating. It may sound silly, but these records will help not just the lenders but you in many ways. For one, it helps determine if you would be able to afford the loan or otherwise.

QM lenders may require you more documents but it is for sure that the ones listed above will be part of it. In a stated income loan, however, an income verification is not necessary as this loan is what it is known for. You will only have to declare how much your income is and will be taken for your word. Although submitting this document may increase your chances for a loan approval but it is never required. The one most important thing you will have to work on is to make your credit report as excellent as possible. This, together with a large down payment and a huge cash reserve, will have loan providers consider your application.

Shop for lenders and ask each for a rundown of all the documents they need. Take them down and compare them. See which ones are easier to comply and which works for you best. Start shopping for lenders today!

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