Stated-Income

Can a Co-Borrower Help you Refinance?

By

Have your financial circumstances changed since you bought your home? If your credit score fell or your debt ratio increased, you may find it harder to get a mortgage now than when you bought the home. What if you could get the help of a co-borrower though? Would that help?

Compare Offers from Several Mortgage Lenders.

In some cases, a co-borrower can help. Keep reading to find out if finding a good co-borrower can help you.

Did Your Credit Score Fall?

Unfortunately, co-borrowers can’t be much help when it comes to credit scores. Lenders look at the middle credit score of each borrower. They then take the lowest middle score between the two borrowers to use for qualifying purposes. If you have worse credit than your co-borrower, the lender will use your credit score.

Here’s an example:

Your three credit scores are 649, 667, and 692

Your co-borrower’s three credit scores are 684, 691, and 695

Your middle credit score is then 667 and the co-borrower’s middle credit score is 691. The lender will use your score of 667 to qualify you for the loan. This credit score should be good enough for a variety of loan programs, but if you have a credit score much below 640, you may find it harder to find a loan program.

Did your Debt Ratio Increase?

Your debt ratio is the comparison of your debts to your gross monthly income. Each loan program has its own maximum debt ratio requirements, but in general, the total debt ratio shouldn’t exceed 41% – 43%.

If your debt ratio greatly exceeds these amounts, you may need a co-borrower to help bring your debt ratio down. Because your co-borrower goes on the loan, the lender can use his/her income to help you qualify for the loan. Here’s the catch, though. If you use the co-borrower’s income, the lender must also include his/her debts. If your co-borrower has a large amount of debts, adding him/her onto the loan may not help.

If you are lucky enough to have a co-borrower that doesn’t have a lot of debts, though, it can help you get qualified for the loan.

The Difference Between the Co-Borrower and Co-Signer

Don’t confuse the two terms co-borrower and co-signer. A co-borrower is on the loan and the title. He/she has rights to the property. This person is also liable for the mortgage. The co-borrower signs all of the loan documents. The co-borrower has a say in what happens to the property, including selling it.

A co-signer is on the mortgage note, but not on the deed. This means that the co-signer also is not on the title. The co-signer does not have ownership in the property. He/she cannot decide to sell the property or make changes to it. The co-signer is still liable for the mortgage payments should you stop making payments.

Click to See the Latest Mortgage Rates.

Should you Use a Co-Borrower?

Now the big question is whether you should use a co-borrower. Typically, the best co-borrower is your spouse. You don’t have to worry about ownership issues when you own the home with someone you are married to. Of course, if you get divorced, you’ll have to split the property or work out a settlement with your lawyers, but the law covers you in this situation.

If you aren’t married and you need a co-borrower, you’ll have to choose someone wisely. Buying with a friend, for example, can be risky. You need a lawyer to help draw up the proper agreement for the ownership to ensure that both parties are properly covered should a disagreement regarding ownership occur. If you can qualify for a loan without a co-borrower, you may be in the best position.

Increasing Your Chances of Approval

If you can’t qualify for a refinance on your own, but don’t want a co-borrower, you can try fixing the issues that prevent you from getting approved. For example:

  • Pay your bills on time to help your credit score increase
  • Pay your debts down to increase your credit score and decrease your debt ratio
  • Avoid taking out any new debt to help your credit’s age increase, which helps your credit score
  • Take on a side job or second loan to help decrease your debt ratio

These simple tips can help you maximize your chances of approval without using a co-borrower. If you do need to use a co-borrower, make sure you choose wisely to ensure that you have the best chance at approval.

Click Here to Get Matched With a Lender.

How to Improve Your Credit Score in 30 Days

By

Did you know that credit scores update every 30 days? This could be good if you have had good financial habits over the last 30 days. It could also be bad if you didn’t have the best habits during the last month.

Compare Offers from Several Mortgage Lenders.

Luckily, it’s possible to improve your credit score in just one month with the right habits. Keep reading to learn how it’s done.

Get Rid of That Late Payment

Did you have a recent late payment report on your credit report? Did you know that it could knock your credit score down as much as 100 points? It’s well worth the effort it takes to eliminate this record.

First, is the late payment true? If it is, you’ll have to do some negotiating with your creditor. Some creditors will give a one-time exception and waive the late payment. They call it a ‘ goodwill adjustment.’ It helps if this is your first and only occurrence with late payments.

If the creditor won’t agree to a goodwill adjustment, you may be able to convince them in other ways. If it’s a credit card, they may remove the late payment if you pay the balance in full. Others may agree to remove it if you set up automatic payments so the risk of a late payment is removed.

Get Higher Credit Limits

Your credit utilization rate has a lot to do with your credit score. The more revolving debt that you have outstanding, the lower your credit score becomes. This could happen in the span of one month. Let’s say you maxed your credit card out one month. If you didn’t pay that balance down or off before the credit card company reported it to the credit bureaus, you just increased your credit utilization rate immensely.

One way around this is to ask your credit card companies for higher credit limits. A higher credit limit means a lower credit utilization rate. This only helps if you leave your credit cards alone, though. If you get the higher credit limit, but then rack up more debt, your credit utilization rate remains high and you won’t improve your credit score.

Use Your Credit

On the other end of the spectrum, are those consumers that never use their credit cards. While it’s a good idea not to have any debt outstanding, it can hurt your credit in the long run. If your credit cards have remained unused for a long time, consider using them for small purchases. You don’t have to go buy things you wouldn’t normally buy. Just charge things that you normally buy, such as your groceries or regular household purchases. The make sure you pay the balances in full right away.

Click to See the Latest Mortgage Rates.

This way you show creditors that you are a good financial risk. You can borrow money and pay it off. This will help boost your credit score in a short amount of time.

Eliminate Mistakes on Your Credit Report

It’s a good idea to check the accuracy of your credit report at least once a year. You can get a copy of your credit report free of charge annually. You can actually get a copy of a credit report from each bureau annually. In reality, this means you can look at your credit reports three times a year if you spread them out.

Once you have the credit reports, review them for accuracy. If there are mistakes reporting on the credit report, get them fixed. This takes time and effort, but it will be well worth it. If you start a formal dispute with the credit bureau, they have 30 days to respond to the dispute. If they can’t come to a resolution with it, by law they must remove the mistake from your report.

Become an Authorized User

The final step is to ask a trusted family member if you can become an authorized user on one or more of their credit cards. Make sure that the credit card company that issued the card reports authorized users to the credit bureaus before you take this step, though.

If you do become an authorized user and your family member that holds the card makes purchases and pays the balance off regularly, it can help your credit score too. The positive financial transactions will have an immediate effect on your credit report too.

Improving your credit score in 30 days is possible with diligent effort. The best way to keep your credit score high is to keep your revolving balances down, pay your bills on time, and keep a good mix of credit. If you need a little boost now and again, though, the above tricks can help.

Click Here to Get Matched With a Lender.

10 Things That Hurt Your Credit Score

By

Your credit score lets lenders know your level of financial responsibility. It’s often one of the first things lenders look at before they decide if you are a good risk. If your score doesn’t meet their minimum requirement, chances are they will not move forward with your loan application.

Get Matched with a Lender, Click Here.

Understanding the top 10 things that can hurt your score can help you determine how to make the most of your credit.

Making Late Payments

Your credit score is made up of a variety of factors, each of which has a different weight. Your payment history, though, makes up the largest factor as it accounts for 35% of your score. If you make your payments late, it can damage your credit score more than many other factors.

Keep in mind, though, that a late payment is one that is more than 30 days late. If you miss your due date, but it’s only a few days, it won’t affect your score. Once you hit that 30-day mark, though, the credit bureaus know about it and they record it on your credit report, affecting your score.

Using too Much of Your Credit

Just because a creditor gives you a credit line doesn’t mean you should max it out. Instead, you should use financial responsibility and only charge what you can afford to pay off each month. Your credit utilization makes up 30% of your credit score.

Just how much of your credit line can you use? Generally, lenders prefer if you have no more than 20% of your available balance outstanding at any one time. If you do charge more than 20% of your available credit, do your best to pay it off right away so that it doesn’t affect your score.

Too Many Inquiries Hurts Your Credit Score

Every time you apply for new credit, lenders create an inquiry on your credit report. This hard inquiry lets other lenders know that you are trying to get new credit. Lenders need to see these inquiries in order to have a clear picture of your outstanding debts. New accounts don’t always show up on your credit report right away – it can take as long as 60 days for them to appear.

Click to See the Latest Mortgage Rates.

Inquiries only knock off 5 points off your credit score, but if you have a lot of them at one time, it can damage your score. Rather than applying for any new credit that catches your eye, be selective and only apply for those loans that you absolutely need.

Closing a Credit Card

You might think you are doing the responsible thing by closing a credit card, but it could hurt your score in the end. This is especially true if you have outstanding balances on your credit cards. Closing an account increases your credit utilization rate because you now have less available credit but the same amount of outstanding debt. If you don’t want a credit card anymore, just put it away, but keep the account open to keep your utilization rate the same.

Cosigning on a Loan

Cosigning on a loan might seem like the noble thing to do. In many cases, it works out just fine. But in those other cases when the borrower defaults, it affects your credit score. You are just as responsible for the debt as the person you cosign on the loan for and if they don’t pay it you are responsible. Not only that, but your credit score may drop if they make late payments or default on the loan entirely.

Letting Accounts go to Collections

If you stop paying a bill or bills and the creditor sends the account to a collection agency, your credit score will likely drop. Having an account with a collection agency shows lenders that you are financially irresponsible. What’s worse is that the account stays on your credit report for at least seven years. It may not affect your score for that long as it usually has the greatest effect during the first few years, but it might hurt you in other ways, such as lenders not approving your loan request.

Filing for Bankruptcy

Bankruptcy is there to help you when you just can’t go on financially any longer. You should know that it greatly impacts your credit score in a bad way, though. Depending on the type of BK you file (Chapter 7 or Chapter 13), your score could drop dramatically. Chapter 7 bankruptcies usually have the greatest impact because you write off your debts rather than set up a payment plan as you do with a Chapter 13 bankruptcy.

Losing a House in Foreclosure

If you stop making your mortgage payments, lenders will take possession of your home in a foreclosure. Not only will you lose your home, but your credit score will likely drop quite a bit because of it. Not only do you have late payments as a result of the foreclosure, but you have a repossession of your home, which is like a double hit to your score.

Not Having a Good Mix of Credit

Your credit score is also affected by your credit mix. It only makes up 10% of your score, but it’s still a part of it. You should have a mix of revolving credit and installment loans for the best impact on your credit score. If you have all revolving debt and no other credit accounts for the credit bureaus to score, it could make your score drop.

Errors on your Credit Report

Human error occurs all of the time on credit reports. If you aren’t aware of the errors, they could drag your credit score down lower than it should be. Rather than letting that happen, make sure you pull your credit report at least once a year to make sure everything is accurate and that your score is an accurate picture of your financial health.

These mistakes could damage your credit score by a few points or a few hundred points depending on the factor. Try to stay on top of your credit by making sure it’s accurate; pay your bills on time; don’t overextend yourself; and make good financial decisions. If something does happen to your score, pick up the pieces and try to fix things. It won’t happen overnight, but with regular good habits, you may be able to increase your score once again.

Click Here to Get Matched With a Lender.

How Long do Inquiries Stay on Your Credit Report

By

One of the first things lenders look at when you apply for a loan is your credit report. This report gives them a bird’s eye view of your financial responsibility. If you are not financially responsible, you’ll generally have a lower credit score than a financially responsible person. Many things affect your credit score, though, including inquiries. So just how long do they hang around?

Compare Offers from Several Mortgage Lenders.

Hard Inquiries on Your Credit Report

The only type of inquiry lenders will see on your credit report are hard inquiries. These occur when you ask a bank for a loan. It could be a mortgage, car loan, student loan, or credit card. Any bank that pulls your credit because they want to extend you credit creates a hard inquiry.

These inquiries can stick around for 24 months. The good news, though, is that it won’t affect your credit score for that long. They typically affect your credit score for the first 12 months. The remaining time, they are there for future lenders to see, but they don’t have an effect on your credit score.

How Much Does a Hard Inquiry Affect Your Score?

A part of your credit score is the credit inquiries made recently. They don’t do too much damage on their own, though. Usually, they knock off about five points. In the grand scheme of things, this isn’t a big deal. But if you go out and apply for different types of credit in a short amount of time, you could knock a significant number of points off your score, ruining your chances for future loan approval.

Click to See the Latest Mortgage Rates.

There is an exception to the rule, though. Let’s say you are shopping around for a mortgage. You want to find the lender that offers the best rate and terms. You apply with four or five different lenders within a 2-week span. Normally, that would cost you 20 to 25 points on your credit score. But, because all of the inquiries are within the same industry, the credit bureau will count them as one inquiry. In other words, you get hit 5 points rather than 20 or 25 points.

This doesn’t work forever, though. You need to do your shopping within a short period of time. We recommend a 2-week window just to be sure, although you may get a little longer today.

Who is Hurt by Credit Inquiries the Most?

Credit inquiries hurt the people with short credit histories the most. These are the people that count on every point in order to ensure a good score. If you are trying to build a credit history, it’s best if you don’t apply for new credit during that time. Just let the credit you have build up – just time will help your score increase as the older your accounts, the better your credit score. If you keep offsetting that with credit inquiries, you might have a hard time getting ahead.

Lenders look at inquiries as bad. Studies show that more than six inquiries in a short amount of time make you more likely to file bankruptcy. If nothing else, it makes a lender think you are desperate for money and are trying to find a lender to give you some. That’s not what new lenders want to see, so make sure you are careful with your applications.

Click Here to Get Matched With a Lender.

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»

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 Does Bankruptcy Affect your Credit?

By

How Does Bankruptcy Affect your Credit?

People used to fear bankruptcy. It was like the death of your credit score. Today, it’s not as bad as you think. While it’s not a good thing, it certainly doesn’t keep you from getting new credit. Oftentimes you can get new credit soon after the discharge. The fate of your credit’s future is in your hands. There are good and bad sides of filing for a bankruptcy (BK). Here we look at both.

The Good Side of Bankruptcy

Bankruptcy can be a good thing. It does seem odd. How could discharging your debts be good? If you think of the alternative though, it makes sense. If you don’t file for BK, but you can’t afford your debts, what do you do? Chances are you don’t pay your debts. This affects your credit score too. At least with a BK, you show responsibility for your actions. You pay the price of the hit to your credit score and you move on. The hope is that you make smarter financial moves in the future.

In general, your credit score could get hit between 150 and 225 points with a bankruptcy. This is a lot, but you could recover faster than if you defaulted on many accounts. Installment loans and credit cards have an impact on your credit score. If you don’t pay these accounts repeatedly, it continues to affect your score. Getting it over with one time with a BK may work to your benefit.

Click to See the Latest Mortgage Rates»

The Bad Side of Bankruptcy

Obviously, a downside to BK is the credit score hit. But, as we stated, if you are going to default, you might as well get it over with at once. Prolonging the default and trying to dig your way out can really hurt your score. But, a BK can stay on your credit report for as long as 10 years. That’s a long time to haunt you. That doesn’t mean your credit score stays low for that long. How fast your credit score recovers depends on your actions. This is where you have a direct impact.

Picking up the Pieces

It is your responsibility to pick up the pieces. Yes, you made a mistake. You had to file for BK. Now you move on. The accounts were either discharged or you repay them via a repayment plan. Either way, the accounts are taken care of. Now you must focus on the future. The faster you reestablish yourself as a responsible consumer, the faster your credit score recovers. Here are a few ways to make it happen:

  • Watch your credit score. Get your credit report often. Each credit bureau will provide you with a free report annually. Since there are three credit bureaus, you can have a report once every four months for free. Take advantage and review your credit history. See what creditors report. Make sure it’s accurate. Accounts discharged in the bankruptcy should reflect this status. If they don’t, provide the proper paperwork to the credit bureaus, then make sure they change it. Any accounts that remain, make sure they are in good standing.
  • Apply for new credit. It may seem odd to apply for new credit, but you must. It’s the only way for your credit score to recover. Secured credit cards are often the best choice. You have a better chance of approval because you only get a credit line as big as your deposit. If you give $500, you get a $500 credit line. If you default, the credit card company can use your deposit to pay the bill. There’s a lower risk of default.
  • Slowly build up your credit. Once you have a secured credit card or two, apply for a different type of credit. Try an unsecured credit card or personal loan. You should have a good mix of installment and revolving credit. This helps diversify your credit. It also increases your credit score. This takes time, though. Don’t expect to get an unsecured credit card or installment loan right away.

No matter what type of credit you get, make sure you pay your bills on time. This will help your credit score too. This will help greatly when you applu for a mortgage with a stated income mortgage lender.

Your credit score is made up of many parts. But, payment history has the largest percentage – 35%! From there, your credit score is made up of:

  • Credit utilization makes up 30%. This is the amount of debt you have outstanding compared to your available credit. Try to pay your credit card bills off in full each month. If you can’t, don’t have more than 30% of your available credit outstanding at one time.
  • Credit history length makes up 15%. This is the length of time your accounts are open. All you can do is wait for this one to help you. This is why applying for credit early after a bankruptcy is crucial to your score.
  • New credit makes up 10%. This pertains to the new credit you obtained. Don’t apply for more than one credit card at a time. Once you get approved for one, wait a while before applying for new credit.
  • Credit mix makes up the last 10%. This is the mix between installment and revolving credit. Try not to go too heavy on either type. This diversifies your risk and increases your credit score.

Choosing between defaulting on your accounts and filing for bankruptcy is hard. While it’s a hard pill to swallow, BK is often the best choice. It’s only a temporary hit to your credit score. It is also easy to overcome. If you work hard and make sure to make smart choices, you can easily fix your credit score after a BK. Of course, you may have slip ups and getting new credit may be hard. In time, though, the damage disappears. Soon you can reestablish yourself as a responsible consumer. Remember the reason you filed for BK in the first place and don’t get in over your head. This way you can make the most of your financial future.

Click Here to get Matched With a Lender»

No Income Verification Loans: Another Name for Stated Income Loans

By

No Income Verification Loans- Another Name for Stated Income Loans

With mortgage rates fluctuating, alternative mortgage products are bound to emerge as they once flourished before the housing crisis. No income verification loans or stated income loans have been one of those mortgage products. While not as prevalent as they were then, today’s stated income loans remain an option for those who can’t document their income the traditional way.

Do you need a stated income loan?»

No Income Verification Loans

With stated income loans, borrowers don’t have to go through the process of income verification using standard documentation, primarily pay stubs, tax returns, and Form W-2s.

  1. Not all borrowers are salaried employees receiving paychecks twice a month; some of them work on a commission basis while others run their own businesses or earn from their investment portfolios.
  2. Tax returns do not accurately reflect one’s income. Business owners often deduct some expenses to reduce their taxable income.

What stated income loans entail is less reliance on those documents to verify a borrower’s income. Your employment will have to be verified but lenders will use other forms to prove that your income meets their standards.

For example, they may require a proof of self-employment from a certified public accountant. Lenders may also require two years’ worth of federal tax returns and transcripts to show you’ve been paying taxes.

No Income Verification Loan Requirements

With fewer documents to work on, lenders have to make sure the loan is sound and the borrower able to repay. It wasn’t long ago when stated income loans were called liar loans because some borrowers or their loan officers inflated their income and asset holdings to get larger loans for pricier homes. These risky transactions contributed to the subprime mortgage crisis of 2007.

Find a suitable mortgage here.»

Against this backdrop, no income verification loan lenders require that the borrower put up at least 30% equity. Some lenders may require 40% down payment as borrowers of stated income loans are understood to have a high income, albeit hard to document.

Another primary requirement is a stable work history because lenders have to verify your employment, after all. Lenders differ by their definition of a “stable” employment record but it could be no glaring employment gaps and job switching all too often.

Moreover, you must possess a high credit score, impeccable even. People with good credit scores have a dependable payment history.

Lenders may require other documents such as rental history and bank statements.

No income verification loans are clearly not for everyone, they target a specific group of homebuyers who can afford to take out mortgages with bigger down payments and higher standards in terms of credit and assets.

If you are looking for a low down payment loan, click this button.»

Credit Guidelines for Stated Income Home Loans

By

Credit Guidelines for Stated Income Home Loans-STATED-INCOME.COMThe housing crisis of 2007 made stated income loans a thing of the past. They were single handedly accused of being the reason for the crisis and were therefore removed from the market. Since then, however, these loans have made a slow comeback for a small portion of the community. Not everyone will qualify for this niche home loan product because of its strict requirements thanks to the new Dodd Frank regulations that all banks must ensure that a borrower can effectively afford a mortgage, but many people still qualify. One of the most important aspects of a borrower for this type of loan is the credit score. Plain and simple – bad credit will get you nowhere.

Minimum Credit Scores

Since there is not any regulation regarding stated income loans, there is not one specific credit score that will qualify or disqualify you for this type of lending – it is up to each individual lender. The lenders that are willing to step out on a limb and not offer Qualified Mortgages are taking a risk because they are no longer provided the guarantees that the QM guidelines offer including the ability to sell the mortgage on the secondary market or protection from litigation from borrowers. Because of this, it is up to each bank’s discretion what credit score they consider high enough to signify financial responsibility.

Think you fit perfectly for a stated income loan? Click here to know your options»

As a general rule of thumb, however, most banks will not consider a stated income loan with a credit score lower than 700. The only exception to this rule would be if you had serious compensating factors to make up for the lower score and lack of verifiable income. Compensating factors in this case typically include:

  • Large amounts of reserves in the bank
  • A large down payment (more than 30 percent)
  • Low debt ratios based on the stated income on the application that coincides with the reserves in the bank

If you wish to pursue stated income loans because you cannot verify your income in a way that will enable you to obtain a conventional loan, you need to make sure your credit is in order. If you have many late housing payments or even installment loan payments made late in the last 12 months, it is best to wait until those are at least 12 months behind you. This gives you time to increase your credit score while making timely payments in order for a lender to take your application seriously as it is very high risk for them to offer this non-qualified loan.

Click Here to get matched with a Lender»