• Home
  • Rates
  • Lenders
  • Guidelines
  • Blog

Stated-Income

Important Loan Costs You Need to Consider

December 7, 2017 By Chris Hamler

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»

What’s With Nonprime Mortgages? Should You Be Afraid of Them?

November 7, 2017 By Justin

They say nonprime mortgages are coming back. In the second quarter of 2017, securitized nonprime loans reached $1.08 billion per CNBC, citing Inside Mortgage Finance. Still, were they ever really gone in the first place? If so, what were they back then?

Instead of being afraid, try to understand the workings and benefits of nonprime mortgages better. One might just be your ticket to financing your first home.

Click here to find reputable lenders.

Getting to Know Nonprime Mortgages

Let’s get this out. There’s a difference between nonprime mortgages and subprime mortgages during the housing boom. Although back then, mortgages with little to no documentation were considered nonprime.

You can rest assured that exotic mortgages that caused the housing crash won’t come back anytime soon. The creation of the Dodd-Frank Act called for many layers of vetting for mortgages. Today’s loans have never been more pristine as a result. However, lenders ended up tightening the credit box even for those who are qualified.

If lenders have to triple-check a home loan, they’d do so because of regulations. The process takes time in itself, putting conventional loans further out of reach for some borrowers.

This tightening of traditional mortgage credit plus the rigorous vetting of today’s loans gave rise to nonprime loans.

Fear Not Nonprime Mortgages

Specialist lenders make up the non-prime sector. They have their own guidelines with respect to the nonprime mortgages they are making – a departure from the usual lending standards embodied by qualified mortgages.

See how today’s nonprime loans differ from past subprime loans:

Let us help you find a lender.

  • Credit: Nonprime lenders are well aware that credit scores can hinder a borrower’s loan prospects, even Fannie Mae has eased up its guidelines with respect to disputed tradelines on credit reports. Thus, nonprime lenders can be more accepting of people with bankruptcy or foreclosure records, checking on their income and cash flows.
  • Income: Verification of income is a must or strictly enforced as one known wholesale nonprime lender said. This is how they gauge the borrower’s ability to repay.
  • Down payment: Nonprime loans have higher down payments than traditional mortgages, say FHA loans with their 3.5% of the purchase price.
  • Loan size: You can find jumbo loans for investment properties that usually exceed the conforming loan limits.

Are Nonprime Mortgages Safe?

During the housing boom, anyone can easily take out a loan without the proper underwriting process. Since the borrower’s ability to repay the loan was not examined, it was also easy for loans to fall into delinquency. Foreclosures were initiated that they hit a record-high 81% in 2008 – a whopping 225% increase from 2006.

Angel Oak, a wholesale nonprime lender that expects its nonqualified and nonprime mortgage originations, e.g. stated income, to reach $1 billion this year, notes that down payments represent life savings for most borrowers. The higher the down payment, the bigger the investment.

Thus, borrowers who put bigger down payments as in nonprime loans are more compelled to meet their monthly dues so they won’t lose their investment. This can be an effective deterrent to delinquencies.

Why don’t you give nonprime mortgages a look? Speak with lenders today.

Click here to see the latest rates.

No Income Verification Loans: Another Name for Stated Income Loans

January 24, 2017 By Justin

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.»

Shop and Compare Stated Income Loans This 2017

January 10, 2017 By Justin

shop-and-compare-stated-income-loans-this-2017

It’s 2017 and stated income loans remain true to their word of offering limited documentation mortgages. If you’re one of those who earn enough but can’t produce the customary paystubs and Form W-2s, a stated income loan might be for you. Consider this as your introduction to stated income loans, their requirements and qualities.

Are you a first-time homebuyer or a refinancer?»

Stated Income Loan Requirements

Originating loans with two months’ worth of bank statements can be risky to lenders so to make up for that risk, they come up with other requirements that would still allow the loan to measure up to the regulators’ standards.

Before you do the actual shopping for loans, here’s what stated income loans require to help you qualify.

1. Credit. It’s a common misconception that stated income loans are for those with bad credit. On the contrary, borrowers may need more than the average credit score to qualify for a low doc home loan.

2. Downpayment. An ideal down payment on conventional mortgages is 20%. With stated income loans, the generally acceptable down payment is 40%. A larger down payment is said to deter a loan default.

3. Income. While the traditional process to document income can be dispensed with stated income loans, having a consistent job history is imperative. By consistency, it doesn’t have to be holding the same job for years but a record of having worked in the same industry for a certain period or a slight annual increase in income.

Need help in qualifying for a loan?»

Stated Income Loans and Qualities

To make a meaningful comparison of stated income loans, consider how low doc loans operate in general.

Type of Mortgage: Stated income loans are historically adjustable-rate mortgages (ARMs). Recently, there have been low doc loans that come with fixed interest rates.

Type of Property: These mortgages finance residential properties, which can be one-to-four unit dwellings, condominium units, etc. It’s however possible to finance an investment property with a stated income loan. Real estate professionals and savvy investors usually use low doc loans to buy homes for rental or income-producing purposes.

Rates and Fees: Rates and fees vary among lenders. For example, one lender offers rates on the 5% level. Compared to the going mortgage rates, stated income loans usually have higher rates because of the lending risk. It’s important to always shop and compare rates.

Repayment: The payback term for low doc loans also varies. Some lenders offer short terms, e.g. nine to 12 months. Others take up to five years to repay the loan.

Still have questions regarding these loans and more? Click this button.»

Stated Income Mortgages – Are They Still Available?

November 13, 2015 By Justin McHood

Stated Income Mortgages – Are They Still Available?
Stated Income Mortgages – Are They Still Available_

Stated income mortgages quickly became a thing of the past after the Housing Crisis of 2008. Lenders were no longer accepting the “smoke and mirrors” type lending where borrowers said they made a certain amount of money, when in reality they did not and could not afford the loan. After that crisis, new loan regulations were put into place and it became much more difficult to get any type of loan, which made stated loans null and void. Today, however, they are making a slow comeback but with a different angle – they are not as easy to obtain in order to ensure that these loans are landing in the hands of the right people – the people that can afford them, but they are available to people that can demonstrate responsible use of their money and that can prove their income in other ways, rather than the standard paystub and W-2.

Click Here to get matched with a Lender»

Qualified Mortgages

The end of the stated income mortgages came about when Qualified Mortgages became a big deal. QM loans are those that are offered to borrowers that can show without a doubt that they can afford the loan being provided to them. Loans that fall under this category have certain characteristics that show your ability to repay the loan. In general, these loans have a debt-to-income ratio lower than 43%, show adequate assets/reserves, and have a great credit score, which means above 700. In addition, these loans do not have periods of interest only payments; balloon payments; or any type of negative amortization – they are straightforward 15 or 30-year loans with standard amortization. These loans cannot have a term that is longer than 30 years or have upfront costs for the loan that are excessive. These loans were the only mortgages seen on the forefront of the lending industry for a while, but this excluded a large portion of the economy as there are many borrowers that do not fit the standard mold, which is when stated income loans started coming back because “rich” people, those with their own company, and those just starting out in life were left in the lurches when it came to buying a house.

Stated Income does not Mean no Qualifications

Today, stated income does not mean that you do not have to prove that you can afford the loan as it did in the past. Lenders are finding ways to prove this with other methods. For example, if you are self-employed and your tax returns do not show adequate income because of the write-offs you use, standard lending will not enable you to get a loan. However, if you have the income and can prove it with bank statements and excellent credit scores, then you will have an easier time trying to convince a lender that you are worthy of a loan because you show a history of paying your bills on time as well as bank accounts with adequate reserves.

Just how much do you need to qualify for a loan today? Every lender will be different with their requirements. Some lenders will need to see at least 12 months of principal, interest, taxes, and insurance in your bank account in order to qualify you for the loan, while others will want more or less than that. As far as credit scores go, many lenders want you to have a score that is at least 700 or higher in order to qualify for a non-income verified loan. In addition, most lenders will not allow a high loan-to-value ratio on stated income mortgages. Instead, they will need to put down a significant down payment, typically at least 20 percent in order to be considered.

Click Here to get matched with a Lender»

The Reason for the Change

Many people wonder just why lenders would stick their necks out again after what happened with the housing crisis. Shouldn’t lenders only give loans to those that can prove they have the income to afford them? While in reality this makes sense, it leaves the millions of Americans that were forced to leave their employment and become self-employed without the ability to purchase a home. Since this makes up a large portion of the people that would otherwise be purchasing homes, it could hurt the housing industry in the end. These “little guys” need to get out there and be able to purchase a home and they are making a name for themselves; they just might not show it on paper at the moment. This is especially true for those that are just starting out and write off every expense they can on their tax returns in order to decrease their tax liability so that they can keep their income and pay their bills. Since they do that, lenders look at their tax returns and think they make next to nothing, when they do – it just does not show up on paper. Why should these workers be punished after they are doing the economy a favor by producing products/services and generating an income? This is why stated income mortgages have made a comeback with a slight twist.

Big Banks are the Heroes

The biggest problem seen out in the mortgage industry when it comes to stated income mortgages is who is going to purchase them? The secondary market wants nothing to do with these mortgages as they were a large part of what caused the problems in the first place. This is why you will not see the common lenders providing stated income loans, because they do not hold onto their own portfolio – everything gets sold. Larger, private banks however, are keeping these loans in their own portfolio. These are the lenders you need to seek out if you want to get a stated income loan. There might be a handful of private investors that are willing to take the chance and purchase stated income loans, but for the most part it is the private banks that keep them on hand and manage these loans themselves that provide the most success for the self-employed.

Figure out your Compensating Factors

Before you apply for a stated income mortgage, it is important to look at your entire loan profile. Starting with your credit – do you have excellent credit scores? Is your credit history clean, meaning that you have no late payments within at least the last 12 months? These are things the lender is going to look for as they need to make sure that you are not a credit risk at all. Typically a score below 700 by even one point will render you ineligible for a stated income loan. In addition, you will need to prove your worth with your assets. Verifiable bank statements will need to be provided in order to ensure the bank that you have not only enough to afford the loan on a monthly basis, but that you have backup reserves in the event that something were to go wrong.

Click Here to get matched with a Lender»

Offer Letter Loans

Another version of stated income mortgages that lenders are now able to offer are the Offer Letter Loans. These loans are perfect for those that are changing jobs (relocating), recent college graduates starting their first job, and those that are going back to work after being laid off for a period of time. Offer letter loans work in a similar fashion to stated income mortgages as the lender is relying on the offer letter provided by the employer to qualify you for the loan. There are no paystub or W-2 requirements in order to qualify. There are some strict criteria that must be met however:

  • There must be an offer letter that is non-negotiable or contingent and it must be signed by both the employer and the applicant
  • The job must be starting within 90 days of the loan closing; this must be proven
  • The loan must be for an owner occupied primary property
  • It must be a single family property (home, condo, or townhome)

In addition, the borrower will have to provide proof of adequate assets. The amount required will depend on the length of time between the loan closing and the date the applicant starts his new job. There should be enough assets to cover the principal, interest, taxes, and insurance for the time period that the applicant will not be working in addition to at least 3 months of reserves in the event that something were to go wrong.

As you can see, stated income mortgages are making a comeback, just in a different format than they were once offered. Lenders still need to make sure that they are not providing loans that they know the borrower cannot afford as the lender could find themselves liable for costs that pertain to the violation of the Unfair Lending Practices set forth by the government. Taking extra precautions by asking for adequate proof of reserves as well as requiring excellent credit scores is just the first step in ensuring that a borrower can afford a loan without difficulty.

Click Here to get matched with a Lender»

OUR EXPERTS SEEN ON

IMPORTANT MORTGAGE DISCLOSURES:

When inquiring about a mortgage on this site, this is not a mortgage application. Upon the completion of your inquiry, we will work hard to match you with a lender who may assist you with a mortgage application and provide mortgage product eligibility requirements for your individual situation.

Any mortgage product that a lender may offer you will carry fees or costs including closing costs, origination points, and/or refinancing fees. In many instances, fees or costs can amount to several thousand dollars and can be due upon the origination of the mortgage credit product.

When applying for a mortgage credit product, lenders will commonly require you to provide a valid social security number and submit to a credit check . Consumers who do not have the minimum acceptable credit required by the lender are unlikely to be approved for mortgage refinancing.

Minimum credit ratings may vary according to lender and mortgage product. In the event that you do not qualify for a credit rating based on the required minimum credit rating, a lender may or may not introduce you to a credit counseling service or credit improvement company who may or may not be able to assist you with improving your credit for a fee.

Copyright © Mortgage.info is not a government agency or a lender. Not affiliated with HUD, FHA, VA, FNMA or GNMA. We work hard to match you with local lenders for the mortgage you inquire about. This is not an offer to lend and we are not affiliated with your current mortgage servicer.

Contact Us | Terms of Use | Privacy Policy | Media | DMCA Policy | Anti-spam Policy | Unsubscribe

Buy Mortgage Leads

Mortgage.info

NMLS ID #1237615 | AZMB #0928735

8123 South Interport Blvd. Suite A, Englewood, CO 80112

CLICK TO SEE TODAY'S RATES