Years after the whole US market plunged into an unprecedented housing crisis, banks and lenders have slowly loosened up on their loan guidelines and products. Today, you can obtain a mortgage without the necessary conventional documents required by a conventional home loan. This opens an opportunity for a lot of potential homebuyers in the self-employed sector.
Applying for a Stated Income Refinance Loan
Fifteen million Americans are self-employed. That is a significant quarter of the population who might find it a problem to get a home loan due to their lack of the necessary income and tax documentation. A stated income loan which only requires the borrower to disclose their income information, is thus a very good alternative for these individuals.
Refinancing a stated income loan requires more or less the same processes as a traditional mortgage. It only differs in the way income is verified. To refinance your stated income loan, you must:
- Shop around and a find a suitable lender that understands your needs and offers fair interest rates
- Fill out and submit your mortgage refinance application
- Provide your personal information
- Disclose income information including source, amount, as well as length of employment (for employed borrowers)
- Provide asset information
- Provide debt information
The process initiates as soon as your application is submitted and you sign a statement that permits your lender to pull your credit. Although stated income loans are less stringent on their requirements, there are still standards that you need to meet in order to qualify and that is what the lender will look for in your credit data and submitted application.
Submission of Necessary Requirements
After you prequalify and settle with a lender of your choice, you can now proceed with submitting the necessary requirements, namely:
- Bank statements from the most recent year
- Your employer’s contact information if you are employed
- Proof of assets
- Proof of current debts
Getting Your Property Appraised
The loan-to-value ratio of your property is a major determining factor in getting approved for your stated income refinance. That is why it is required to go over a home appraisal by a professional appraiser. Aside from that, the appraisal will also determine the market value of your home and the necessary improvements that should be done before you can proceed on the sale.
Once all the required documents are submitted, your property appraised, and your lender has verified all the necessary information, you are now ready to close. When signing closing documents, be sure to read the fine print before you put your signature on the dotted line. During closing, the funds will be distributed accordingly to the right parties.
The different manner of income verification is the only thing that sets the difference between stated income loans and your conventional mortgages. It is not hard, but deciding to take it is a risk both for you and for the lender. For you, because stated income loans have higher interest rates than their traditional counterparts, and for the lender, because they are giving you money based on alternative documents that may not provide full guarantee your ability to repay.