Stated-Income

How Do You Protect Yourself From Identity Theft?

By

test1test1test1

As more of our personal and financial activities are digitized, the threat of information security is also becoming more and more real. Almost every other month, we hear news about hackers getting ahold of controversial information from corporate or government agencies. Perhaps you’ve had a close friend who’s been a victim of credit card fraud. Or maybe you’re one of the 145 million individuals affected by the Equifax breach.

Whether you’ve had first-hand experience of these or not, one thing is for sure: the need to secure your personal and financial information has never been this important.

Check out today’s mortgage rates.

Identity theft is a real threat. In 2017, the Theft Resource Center has counted 1010 data breaches involving the records of 171 million consumers.

There are many forms of identity theft but the most common types can be classified into six categories:

  • employment or tax-related fraud
  • credit card fraud
  • phone or utilities fraud
  • bank fraud
  • loan or lease fraud; and
  • government documents or benefits fraud

The most seemingly innocent information which you might have for granted your whole life can cause a whole world of disasters. Your birthdate, address, and social security numbers alone can easily be used to loot your bank account empty or sign you up to services you’d never want to have anything to do with in the first place.

Fortunately, there are steps that you can take to mitigate such lethal possibilities.

Consistently check your account statements

Not that you’d have to manually log into your account every other four hours. Be religious in checking your account statements from time to time and look for any errors, inconsistencies, or other suspicious activities. Immediately report them to the proper authorities if you spot one.

If your bank has an app that helps you monitor your transactions, that would tremendously help.

Avoid Public WiFi for sensitive financial transactions

Public wifi is feasting ground for hackers who want to intercept sensitive information from any device user who connects to the network. Never transact within a public network. Make sure you use a secure web connection (HTTPS instead of HTTP), and clear the cache when you’re done.

Don’t share sensitive information via email

You can only be too careful online. Any determined or skillful hacker can penetrate your network, intercept your email, and steal sensitive information. Sometimes, it really does pay to be a little bit paranoid.

If you need to pass on some sensitive personal or financial information, do it in a safer way and never through email. Check out these secure ways to transmit files from TechRadar.

Find a lender today.

Beware of phishing

Phishing is a common real estate scam where hackers pretend to be representatives from reputable companies. They send their targets emails presenting a certain dilemma that could coax them into revealing their personal information, such as passwords and credit card numbers.

This is one of the reasons why you should not click on links in emails (unless your dead sure it’s from a secure source) or transact online.

Only use strong passcodes

If somebody’s trying to break into your account, having a strong gate key would certainly be a headache. A strong password typically has ten characters, composed of letters both lowercase and uppercase, along with a mix of numbers and symbols.

Yet, aside from generating your impenetrable pass key, see to it that you don’t lose it later. It’s fairly common among users to have to have problems with lost accounts due to lost passwords. Either you write them down manually, keep them in a notepad on your phone without an indication of your email id, or use any secure strategy you can come up with.

And most importantly, never share your password, even with your significant other.

Check your credit report

You should consistently check upon your credit record, whether you’re planning to get financing soon or not. This is to ensure that no hocus pocus is happening within one of your credit accounts.

Consumers are entitled by law to receive a free credit report from the credit reporting agencies every year. See to it that you check your record for any inconsistencies. If you find any, dispute them and report to the appropriate authorities.

Consider using a fraud alert or freeze for your credit accounts

A great way to add an extra layer of security for your accounts is to use a fraud alert or freeze to your accounts. Alerts are usually free while you can add auto freezes for a fee.

Identity theft is a terrible crime that can cause you not only thousands worth of dollars but also your reputation. Be sure you don’t end being one of its victims (again).

Click to See the Latest Mortgage Rates»

Mortgage Rates Could Enter Period of Volatility Per Experts

By

test1test1test1

Market projections point to rising interest rates. According to recent data and expert predictions, it could reach the 5 percent tier by the end of next year. Housing inventory is also expected to ease up by 2018. So should you lock now or wait for home prices to relax?

Just this week, mortgage interest rates inched forward as the senate passed its version of the tax bill. Per the recent Primary Mortgage Market Survey® data released by mortgage giant Freddie Mac, the 30-year fixed-rate increased by an average of 0.5 basis point to 3.94 percent. A week ago, 30-year fixed-rate was at 3.90 percent, still lower from 4.13 percent during the same time in 2016.

Meanwhile, the 15-year fixed-rate median percentage rose from 3.30 percent a week prior to 3.36 percent. An increase of 0.5 basis point. This is the same average a year ago.

The five-year adjustable rate also increased by 0.3 basis point from 3.32 percent last week to 3.35 percent – slightly higher compared to 3.17 percent last year.

Get today’s mortgage rates.

Period of volatility

The possibility of an increasing federal borrowing trend was spurred by the Senate’s vote on tax legislation. This in turn is predicted to take mortgage benchmark rates higher.

Possible impediments to this potential increase are global market factors that have significant influence on Fed rates.

“It seemed at the time that mortgage rates were poised to continue rising,” says Sierra Pacific Mortgage branch manager Michael Becher.

“But this week markets have turned their attention elsewhere. Concern about China’s economy, continuing tensions with North Korea, turmoil in the Middle East as a result of Trump declaring Jerusalem the capital of Israel, and a possible U.S. government shutdown have all contributed to a flight to safety trade that has seen Treasury yields and mortgage rates drop,” he adds.

The possibility of the government shutting down and the tax reform bill legislation are elements in the game that will determine how rates will behave in the near future.

Any positive aftermath from these events will most likely cause rates to increase. When the Fed shifts gear next week, mortgage rates could very well enter a period of volatility.

Find a lender today!

What does this mean for the home buyer?

There’s a rising trend in interest rates. If you want to play it safe and there are no other reasons holding you back, it might be wise to lock now. However, if your need to move is not urgent and you want to see how the events play out – with the above data projections on inventory in mind, then you could wait a bit more to find properties that will potentially be more affordable in the future. Or, you can choose to get an adjustable-rate mortgage with low initial interest rate and refinance to a fixed-rate later.

The Survey

The Primary Mortgage Market Survey® was established in April 1971 as the foremost source of mortgage trends in the regional and national level. Its data is utilized by both the public and the mortgage industry at large to gauge market conditions and evaluate mortgage loan options.

Click to See the Latest Mortgage Rates»

Important Loan Costs You Need to Consider

By

test1test1test1

Before you take the crucial decision to get a loan, what costs do you need to consider? What sorts of financial responsibilities does a loan borrower have to shoulder?

The American economy runs on credit. This never-ending cycle of borrowing and spending that lays one of the basic foundations of our community and culture. And we know it. Almost all of us had the need to borrow at some time in our lives. This fact is much accentuated by the importance we place in our credit scores.

The credit system has been around for more than a century. But this system of bargaining has become more and more prevalent during the past few decades, especially with the advent of the internet. You can find banks and lenders everywhere offering secured and signature loans at very attractive rates while various lending platforms have sprouted online. All these are making access to credit easier to people who need them – and those who think they need them.

To prevent yourself from falling into the temptation of taking on debt you don’t really need, or from rushing into a deal that you won’t be able to afford later, know these important lending costs first.

Get today’s rates. Click here.

Interest rate

Interest rates can either be fixed or variable. With a fixed interest rate, your payment remains constant and unchanging throughout the life of the loan. Meanwhile, a variable interest rate resets after a determined period of time. Typically, fixed rates are higher than the initial rate offered by most variable rate loans. However, most people prefer to take on a debt with a fixed rate interest because of its stable nature. Variable rate loans, on the other hand, can offer strategic benefits when you want to take advantage of the lowest rates possible. If rates decline, you will have a good chance of even lowering your payments even more. But if rates increase, you can always choose to refinance into a new loan with a fixed interest rate to avoid the nightmare of skyrocketing interests.

Prepayment penalties

Some loan programs charge the borrower a fee for paying off their loans earlier. This is because interest charges are spread throughout the life of the loan and if the borrower decides to prepay, lenders risk losing those interest payments.

Before you sign on the dotted line, make sure you understand the terms of your loan, including agreements about prepayment. Although most people don’t think about it when they borrow the money, majority of borrowers actually end up looking into this option at some point during the stretch of their loan.

Click here to get matched with a lender.

Investment-linked insurance

This is a type of insurance that shoulders the loan payments in case the borrower passes away. It’s a cushion that not everyone may think about but could be extensively helpful when needed. Grieving is already overwhelming; having to pay a huge debt on top of that would just add anxiety to their grief. Individuals who have no other adult relatives to rely on may explore this option. Beware of scams, however, as this segment of the insurance market is filled with shady operators.

Interest saver accounts

If you don’t want to prepay because of hefty penalties, you can opt for another tactic which is to put your excess money in an interest saver account. This account should be linked to the account you use to pay your mortgage. The lender deducts the daily balance available in your account and computes interest on the resulting principal amount. This strategy erodes your interest payments over time and you can withdraw from the account any time you want.

Never rush to a decision without fully grasping what a loan situation would mean for you. Balance out your great expectations with the cost responsibilities. Properly evaluate your financial capacity before pushing for the go button.

Click to See the Latest Mortgage Rates»

How to Set Up an Income-Earning Blog

By

test1test1test1

As the internet continues to compress global economics into the digital space, more and more businesses find themselves treading the crucial path to digitization. But it’s not only businesses that are taking advantage of a new era. Many individuals are also exploring the profit potential of building their own digital empires.

Check out today’s mortgage rates!

Indeed, nowadays, one can find plenty of ways to earn money via the internet. Paid jobs that only require remote work are appealing to those who don’t want to be shackled by the 9 to 5 convention. Content writing, social media management, and answering surveys are some of the most common ways that freelancers earn money online. While many of these might be lucrative, most of these jobs are one-time and require active engagement most of the time. If you have a full time job but still want to make passive income, however, monetizing a blog could be your way to go.

Many online guide articles on how to monetize a blog needlessly sugar coat the true commitment that one needs to dedicate in order to create a successful blog. Because here’s the thing: there’s no money in being a blogger – at least in the beginning. A blog with good views and efficient returns do take time and patience to set up. But once you’re on the path, it could really gain sufficient income.

Starting your own blog

Starting a blog is a two-way process. First, you need to be efficient of the technicalities that come with managing and maintaining a website, scheduling posts, learning about SEOs and even analytics, etc. Second, you need to be able to integrate your technical knowledge into your creative approach.

Here’s a breakdown of the process of starting a blog. Follow these steps and feel free to insert your own input if you think they will help you attain your goals easier.

  1. Determine your niche.

What would you like your blog to be about? What would you like to write about? The niche is your unifying theme and determines what kind of content will be found in your website. It should be something that you are knowledgeable about if you want to save too much time in researching. You can also write freely if the subject is already familiar to you and can engage in more meaningful interactions with your audience who want to discuss the topics you are tackling.

  1. Name your domain

There are certain things that you need to keep in mind when choosing a domain name:

  • As much as possible, include your site’s main keyword in your domain name
  • Choose a domain name that is no longer than 15 characters and is not longer than three words
  • Choose a domain name that does not contain a hyphen
  • Stick to the dot com extension if you can. This more generic extension has more reach than other second-level extensions such as .info or .net. Avoid country-specific extensions as much as possible.

  1. Choose a host.

A website hold essentially helps you get your site online. At the start, you don’t really need a high capacity account. You just need to make sure that you have enough amount of space and bandwidth that will be able to support your site’s traffic. Before you decide on a site, compare offers, read reviews, and watch out for any accompanying affiliates.

  1. Select your content management system.

There are various content management systems available today though the most common is WordPress. If you want to opt out of this popular CMS site for some reason, you can explore other systems such as Drupal, Joomla, Magento, Blogger, Shopify, and Wix.

Need financing? Click here.

  1. Configure AMP pages.

Internet speeds are not uniform in all countries. If your site is too heavy, chances are loading time will take forever in countries with slower internet speeds. Most viewers just abandon sites that take too long to load. Configuring the AMP or Accelerate Mobile Projects helps you get around this problem. Generally, AMP specifications help thin down a page and remove minor elements that cause slow loading times. If you don’t know how to set it up yourself, you can ask for hired help online or perhaps ask a developer friend to help you out.

  1. Set up Google Analytics.

An Analytics systems helps you monitor your site’s traffic and see where your views are coming from.

Though there are other analytics systems in existence, the most popular one is Google Analytics. It’s also easy to set up. After you create an analytics account, use your Google Task Manager plugin or install an Analytics plugin to configure and link everything.

  1. Write good content.

And by good, I mean keyword-focused, SEO’d content. There are plenty of rules to follow in writing good content but the most generic advice are summarized as follows:

Write with a punch. Depending on who your target audience is, you should use devices that will keep them engaged from the first sentence to the last. For those writing for a general audience, a conversational tone with short, direct-to-the-point paragraphs typically works.

Don’t veer off topic. Stay focused to what you are trying to convey. It’s important that you do not overwhelm your reader either with too much information or too much narrative – unless used in a good way.

  1. Pick an income stream.

Making money from the content you’re making, though viable, will not happen in an instant. For some, it could take years. For those whose spirits are easily dampened by quick episodes of failure, that may not happen at all. The important thing is to keep going. In the meantime, you can hope to earn some from running ads, or selling eBooks or other merchandise to monetize your website. Though it may not be lucrative in the upstart, incurring income from small purchases can surprisingly add up into some serious sum.

  1. Set up a marketing strategy.

If all goes well and you suddenly find yourself with hundreds of subscribers, you need to start reaching out. A way to do this is to set up your own email marketing campaign. It’s an avenue to create more value while crafting opportunities to gain more site views and clicks. But once you’ve reached this point, you need to make sure that you will have the time and the capacity to be consistent with your emails.

If your audience base has gone up to the thousands, you can create a subscription program with a fixed subscription price. If your content is really reputed to be good, fueled actively by your consistent email marketing, it could very well be a lucrative endeavor.

Don’t expect that there’s no competition online. It’s a game of technicalities and above all, persistence. Integrate your social media knowledge to promote your site, share your content, and most importantly, never lose sight of your goal.

Click to See the Latest Mortgage Rates»

What Do Millennials Fear the Most?

By

test1test1test1

A recent survey from financial advice website Credible reveals the one thing that scares Millennials the most: having a credit card debt.

You hear it right. Taking majority of the pie’s share at 33.2 percent, having high credit card obligations scare millennials more than death which only made up 20.4 percent of the responses.

The survey was participated by 500 Americans who have existing credit card debts. About 33 percent said having a debt is the scariest aspect of their lives.

Other respondents cited death (20.4 percent), war (16.8 percent), working forever (11 percent), and 6.4 percent said climate change. A good 12.4 percent of those interviewed causes other than those above.

Check out today’s rates!

Worried but confident

The survey also asked millennials some follow up questions such as how they got into debt in the first place. About 34 percent said it was due to some emergency expense, 32 percent said it was because of some one time, expensive expense, and 4 percent said they willingly chose not to pay their dues despite having the finances to do so.

When asked if they have a plan to handle their debts, about 80 percent confided that they are confident they can eradicate their debt within the next 12 months.

Having a credit card can be a good financial tool to help a borrower build his or her credit. However, it can easily be abused by holders who have no definite spending plans. If you have existing credit card debts, experts suggest you take these actions to help you get back on your feet and reduce your liabilities:

  1. Pay off your debts. If you don’t have the financial capacity to pay for them all at once, start with your smallest debt until you successfully pay it off. Do the same with your other debts until you erode your obligations, one at a time.
  2. While in the process of paying off debts, try as much as possible to limit your spending. Do not spend more than your available credit as that will ramp up your utilization ratio. This is a red flag for lenders if you’re planning on taking major debts (e.g. mortgage, car loan) in the near future.
  3. If you can, pay off your balances in full every month to avoid accruing interest payments.
Find the best financing option for your needs.

Not impossible

Handling credit card debt can be daunting but it’s not an impossible task. The best guard against having high debt is responsible spending. The best way to spend responsibly is to have spending plan in place. Of course, that requires a huge amount of personal discipline especially today when every button, page, or site you visit tempts you to purchase. It may require practice and a thorough evaluation of your own financial capacity. Learn to prioritize. Put your needs first and never forget to save for the future and for emergencies.

Ideally, credit cards are only good for minor purchases. Keep your liquidity. If you can, spend cash before you turn into credit and always examine the facts first before you decide to obtain certain heavy purchases.

Click to See the Latest Mortgage Rates»

Is it Possible to Get a Stated Income Loan for Investment Properties?

By

test1test1test1

Most banks are happy to finance investment properties for borrowers who have less than four mortgages under their name. Unfortunately, they frown on applicants who have problematic credit history, short employment history, have more than four investment properties in their portfolio, or those who have unconventional sources of income. Can the stated income option come to the rescue?

Stated income loans have their roots even before the housing crisis. In fact, they used to be very common, despite the high risk they carry. The accumulation of these non qualified loans led to the housing collapse in 2008, leading lenders and borrowers alike to shy away from such offers. However, they didn’t disappear altogether.

How do you get a stated income loan?

In the years that followed, stated income loan offerings shrunk but as the years erased the trauma of the previous crisis and more demand kept coming in, lenders began to see the profit potential in the underserved borrower market. Today, such loans are making a comeback. Are they safe? Experts suggest that these loans aren’t the same as their predecessors because of more stringent underwriting standards. Stated income loans today may be harder to qualify than their their subprime counterparts pre-recession.

If you get turned down by big banks on your investment property financing application, you can look to lenders such as:

  • Local Portfolio Lenders. These lenders lend their own money and don’t sell their loans to the secondary market.
  • Hard Money Lenders. They specialize in providing loans for fix and flips or rental properties for a short period of time.
  • National Lenders. These lenders specialize in financing rental properties.

Why is it hard to get a loan on investment properties?

After the 2008 recession, the government established rules that required strict underwriting requirements to make sure the borrower can repay the loan. This wasn’t the case before the crisis. Lenders used to provide loans even without verifying a borrower’s income.

This made it difficult for many borrowers who have the money but can’t establish the proper proof that they can, indeed, pay for the loan. Most of these borrowers have huge debt-to-income ratios due to the huge amount of credit on their name. Many of these investors also take huge deductions on their taxes. If your taxable income is too low, you’ll have poor chances of getting a loan. And even if the borrower does manage to get a loan, there’s another set of barriers to refinancing.

Find a mortgage option that's right for you.

What other benefits can I get from getting a mortgage under alternative lenders?

Most local portfolio lenders do not care if your properties are under your name or an LLC. Most banks require a property to be under the investor’s name which can pose a problem if he or she is trying to limit liability. A strategy that most investors follow is to transfer their properties to an LLC when they finance with a bank later. Unfortunately, the banks can call the loan due when the property is sold and transferring the property to an LLC is basically selling it. This complication is avoided with certain stated income lenders.

Click to See the Latest Mortgage Rates»

How to Manage Your Finances If You Have Fluctuating Income

By

test1test1test1

Budgetting

How do you structure your budget if your income is unpredictable?

Internet-ready mobile devices have allowed many of the jobs traditionally held in office cubicles to be done on the go. Jobs like web development, content marketing, teaching, and research and language services are now easily outsourced to different talents across the globe.

The ease of working on your own time, at your own pace has appealed to many, as statistics on freelancing show. Today, freelancers make up 35 percent of the US labor force, collectively earning a staggering trillion in just the past year.

How is this work status affecting a freelancer’s financial stability?

While the margin for earnings is huge in a work with no predefined figures, most budget models rely on a fixed regular income stream.

So how do you, as a freelancer, handle a tricky financial position with fluctuating income?

While this setup can indeed be challenging, properly managing one’s finances is certainly doable. Here are some tips you can follow:

Determine Your Variables

What is X and how does it change depending on Y?

First things first, determine your average monthly income. A good way to do this is to sum up and get the median income from your last 12 months of work. If you think the resulting figure is biased due to a few months of very high payments, you can instead opt to select the lowest income earned in the year and use it as your base.

Now, you have an estimated monthly income.

Step two is tracking down your expenses month per month and determining which ones are necessities and which ones can be cut back or eliminated from the picture entirely.

These priorities may include your mortgage payments, your food allowance, transportation, insurance, health, and family expenses. You also have to factor in annual expenses such as tax payments so by the end of the tax year, you don’t have to come up with a lump sum and defy your budgeting entirely just to make way for a big one-time obligation.

Before building your priority expenses into your monthly budget, you must first earn some level of income regularity, especially if you’ve always had a fluctuating income. If this is your first time freelancing and getting variable salary every month, it’s wise to pay off your debts first than integrating them into your monthly budget head-on. The goal is to have the least recurring expense so you can maximize your earnings.

Need financing for an emergency? Let us help.

Build Your Buffers

Since work and income are flexible factors, there is a real possibility that you may end up cash-strapped on certain months when earnings fail to meet your expense priorities.

To prevent the nightmare of having nowhere to turn to when your finances get tight, a good plan B is to establish buffers.

First, you need to have one ready to cover for income gaps on certain months. You should not look at this fund as another form of income. It should only cover the minimal gaps that you need to meet your budget.

On the other hand, you also need to set up an emergency fund. This would cover emergency medical expenses, household repair, unexpected travel expenses, etc.

It is important that you keep these buffers separate.

Get today’s loan rates!

Save, save, save

Given that you are betting against certainty, it becomes more and more important for any freelancer or small-time entrepreneur to build up a strong savings account. Start early. Set your goals and make sure you stick to them. Make your savings contribution a significant element of your monthly budget structure. Some financial experts would even tell you to take out the savings part of your income first before you break it down to the expenses. Still, be realistic. What’s more important is keeping it consistent.

Organize

Organize to the point of certainty. It’s the one thing that could balance out the uncertain element of your job or business. If possible, make a separate account where you receive your income and a separate one for your monthly budget. When income is high, don’t take advantage of the extra dollars. Use it to boost your savings or your retirement accounts. You may also use it to max your buffers and achieve peace of mind knowing that you are adequately covered when the need arises.

Discipline is key when it comes to achieving financial health, regardless of whether you receive a steady amount of salary or not.

Click to See the Latest Mortgage Rates»

How to Actually Earn More Thru Your Side Gigs

By

test1test1

Money

How can you maximize income and productivity while taking side gigs?

 

Do you feel like your full time job is not satisfying enough? Do you have too much free time that you want to turn into something productive and profitable?

Take on side gigs!

It’s a good way to earn more income if you don’t want to leave a high-paying job. It’s also a challenging means of exploring your other skill sets and who knows, maybe through time, it can help you prepare to swing your career to something you think is a better fit for you!

Want to find a stated income lender?

 

Taking on side gigs fails for most people. So, they end up burnt out. Every day feels like a never-ending nightmare, and the pay doesn’t almost feel like they’re worth it.

What shifts do you need to make in order for this whole part time thing to work out for you?

The passion factor

A lot of Americans feel unmotivated at work. They come, day in and day out, lacking the spirit and enthusiasm to the point that waking up each day actually feels painful.

Taking on part time work is an opportunity to work on areas that you’ve always been passionate about OR to discover one. It can be anything you want, from the craziest manual jobs to selling artwork on Etsy. The thing is, hard work cannot come from just going through the motions. To be good at something requires a kind of persistence that can only come from passion.

Learn something new

Once you find something you are interested in and begin work, it’s unsurprising for you meet some technical challenges. Instead of outsourcing the work, you can think about it as an opportunity to buff up your skill set. It’s never too late to learn.

Take on the challenge and set foot outside your comfort zone. If you’re the kind of person who’s up for challenge, this is the way to go.

You must take note, however, that this does not only require extra time but also money. But unlike monetary savings, it’s an investment that you can earn more from in the future. Learning a new skill set helps make your resume more diversified and attractive, and may provide a leeway to learning more advanced skills in the future.

Own your time

Do you ever notice how you mindlessly scroll through Facebook or Instagram, only to realize that you’ve wasted two hours passively looking through people’s lives? Have you ever experienced the pure joy of overcoming the temptation of going to social media to do other more real-world interactions?

Practicing smart time management habits can help you take more ownership over your life, and less on passive experiences that often leave you empty and unfulfilled.

It may be hard to adjust in the beginning but persistence and loyalty to your personal schedule can help you adequately organize your life and actually realize your more important goals.

Master yourself

As you go along the learning curve and tackle more tasks, you also get to learn more things about yourself – your strengths, your weaknesses, and how you respond to difficult situations. When it comes to part time work or freelancing, you usually have to be accountable for your own work.

Mastering yourself helps you manage situations better, helping you to move to a better path forward.

Don’t be afraid to reach out

Network with professionals. Learn more about others’ dynamics and see if you can learn something from them. Often, if we need help and don’t want to learn beyond our field, networking helps you reach out and collaborate to get work done. It’s also a fine way to make new friends and perhaps some potential business partners.

No doubt, taking on a side gigs can be intimidating. It may not be for everyone. But for those who dare take on the challenge, here’s a tip of the hat to you. Discpline yourself first. The profit comes later. Cheers to that success!

Click to See the Latest Mortgage Rates»

What are the Pros and Cons of Stated Income Loans

By

test1test1

What are the benefits and disadvantages of opting for a stated income loan over a traditional financing option?

 

Most loan and mortgage programs require the borrower to undergo a tedious underwriting process.

These often come with strict lending requirements such as an asset and income verification process which lengthens the loan acquisition timeline (given the lender uses traditional lending tools).

It also leaves out borrowers who earn from unconventional income sources and have a difficult time documenting their salaries.

This is the very same problem faced by self-employed individuals, those who have very high earnings, or those who make money seasonally.

For this reason, stated income loans remain attractive as an alternative financing option for many. It offers a streamlined loan process and saves borrowers the hassle of getting the necessary documentations for the process.

But there’s more to stated income loans than offering fast money. Like any other loan option, there are also setbacks and risks that borrowers would have to consider when looking to get a stated income loan.

Let’s get to the details.

Get today’s rates!

Why get a stated income loan?

Bypasses the regular job dilemma. The problem with most traditional loans is that they expect all their borrowers to have regular incomes which is just not the case for a significant number of the borrower market.

Paystubs have become the standard basis for evaluating risk so if you’re a freelancer or a businessman, you’re in trouble. For these people, documenting a regular income is not an option. Failure to do so can make you appear as a huge risk to their investments and therefore deny your application.

Not fair. If you’re among the nontraditional income earners in the demographic, a stated income loan which only requires you to disclose your earnings suddenly becomes handy. No need to convince anyone.

You decide your own risk. While traditional loans leave the risk evaluation to banks and lenders who ask: “Can he or she afford it?” borrowers of stated income loans are left to ask for themselves “Can I afford it?” and decide the financing path from there.

You have no need to worry about your DTI ratio being too high or your utilization ratio going overboard.

Fast transactions. Because traditional underwriting process is skipped in stated income loans, stated income loans are generally faster. It’s especially helpful if you are in immediate need of finances.

What are the disadvantages of stated income loans?

High interest. To compensate for the huge risk that your lenders are taking to offer stated income loans, they charge an interest rate higher than traditional loan programs. Remember that a single point difference in interest can sum up to thousands worth of interest payments throughout the life of the loan.

If you don’t need financing so urgently, talk to your lender and see if you can agree to find another way to document your income without resorting to a higher interest loan option.

High potential for default. Traditional loan qualification standards are designed to assess a borrower’s creditworthiness. With a stated income loan, all that safety mechanism is bypassed, thereby leaving you and the lender vulnerable to the real risk at hand.

In some other cases, a real assessment of risk is the only barrier stopping an irresponsible borrower from damaging his or her finances further or from abusing financing programs.

If you are in doubt of your own capacity to measure your own risk, consult a financing professional who can help you crack the numbers and make an informed decision about whether to go ahead or pass financing for now.

Click to See the Latest Mortgage Rates»

RSA Funding Now Offers Stated Income Commercial Financing

By

test1test1

Investors

Nationwide commercial mortgage banker RSA funding now offers a state income commercial financing option through its wholesale channel.

Underwriting can be pretty tough on self-employed borrowers and property investors due to their income or debt-to-income ratio issues.

Inconsistent income streams that are pretty hard to document or a broad credit portfolio can make banks wary of the risk presented by these types of borrowers.

As a result, most of them are turned down by banks and other private lenders, leaving a significant part of the borrower market underserved.

Commercial mortgage banker RSA Funding realized this issue and saw that something needs to be done to meet the needs of individuals who, despite their non-traditional qualifications, are still creditworthy.

And indeed, RSA delivered, as it just recently rolled out a new product through its wholesale channel called the stated income commercial financing option.

Get today’s stated income loan interest rates!

 

A significant addition

Adding to its roster of loan products, RSA Funding’s stated income commercial financing option:

  1. Offers financing for one-to four-family non-owner occupied properties
  2. A loan-to-value ratio of up to 80 percent may be allowed depending on the type of property being financed
  3. The minimum loan amount is $100,000
  4. Interest rates start at 8 percent
  5. Loans close within two to three weeks in average

About RSA Funding

A nationwide commercial mortgage broker, RSA Funding specializes in placing commercial mortgage borrowers in loans through its wholesale lending channels. RSA Funding brokers many different loan types such as Stated Income, Multi-Family, SBA, Bridge and Bankable Loans.

Not just commercial

Stated income loans are not limited to the commercial market. Many lenders also offer stated income loans for individuals who cannot present traditional income documentations such as W2 forms or tax records. Instead, lenders simply ask the borrowers to state their income and they take their word for it.

But it’s not actually that easy. Lenders who give out stated income loans these days still require their borrowers to have good credit, lots of cash reserves, and even high down payments.

Your employment and/or investments are verified, and you need to show your bank records and statements to prove that you have money.

Because this mortgage product is usually considered risky, borrowers are usually charged with higher interest rates than conventional, conforming loans.

Most stated income loans are based on the equity position of the property. That means that the more the borrower puts down into the property, the easier it will be for him or her to get a loan approval.

Stated income loans are preferable for people who don’t want to pass on certain investment properties but had their cash already intended for some other purpose.

Some investors, who although have the reserves to purchase the property in cash, still choose to use a stated income loan because they want to keep a portion of their money for other investments.

Rules on investment mortgages

New laws established in 2014 made it hard for lenders to approve loans without determining a borrower’s ability to repay. However, most investment mortgages became exempted to the rule since they are considered business loans.

The Dodd-Frank Act of 2010 also made it illegal for lenders to offer stated income loans.

Now, almost a decade after the financial crisis of 2008, many lenders are starting to relax on their guidelines and qualifications. But can these loans be considered the new subprime?

Hardly so, as being lax in one area of qualification is also compensated with some other requirement (e.g. only stated income but a requirement of about 40 percent in down payment or more, etc.).

If you’re a self-employed individual or investor looking for investment financing, programs such as that offered by RSA is worth exploring.

Click to See the Latest Mortgage Rates»