Understanding Stated Income Loans

UnderstandingStated Income

LoansSTATEDINCOME.ORG

STATEDINCOME.ORG LENDER HOTLINE: 888-581-5008

http://suited45trk.com/?a=75&c=1959&s1=&ts=siss

You may have heard listening in to the mainstream news allabout home loans that according to them no longer exist, likestated income home loans. Well, not only do they still existthey just have a few new regulations. New regulations requirelenders to offer mortgages with stricter guidelines forborrower debt-to-income ratios, also stricter guidelines whenit comes to proof of income as well as getting rid of featuressuch as “interest only” payments and negative amortization.These types of home loans are called a qualified mortgagealso known as a QM. Lenders who choose to fund a QualifiedMortgage benefit significantly from funding them, such aslenders can sell the loans to investors as mortgage backedsecurities and they have a more sturdy protection againstlitigation in the event the borrower defaults.



This makes Qualified Mortgages very popular andmany lenders choose to work with only this typeof loan above all others. Qualified Mortgage loansdon’t work for everyone, and some lenders areeven taking the extra step to provide options forother worthy borrowers. Some companies thatoffer loans do not require borrowers to prove theirincome with tax returns, those loans havenicknames such as alternative documentationloans or alternative-income verification loans.



These types of loans are most commonly known asstated income loans, and applicants attempting to getapproval for these loans do still have to show they canfinancially afford the home, many choose to providebank statements. Bank statements can show the lendersexactly how much money is coming in vs going out,which provides a good understanding of the borrower’scash flow. Bank statements also shows the borrower’sreserve, meaning money available to make the housepayment in the event income stops. Normally, lenderslike to see exceptional credit scores as well, a borrower’sFICO score should be at least a 700 or higher, but somelenders will accept a score as low as 620.



If a borrower can at least show they can provideenough income to supplement 12 months’ worthof mortgage payments a lender will work withthem. Lastly, applicants shouldn’t expect to buytheir property with a low percentage down.Majority of the time these types of loans require adown payment of at least 20%, but between25%-30% is more accurate. Rates can typically.50%-.75% higher than those of fully documentedQualified Mortgages.



Self-Employed andStated Income Loans



The standard for QM’s (Qualified Mortgages) requiresborrowers to provide proof of a maximum 43% debt-to-income ratio. Meaning no more than 43% of theapplicant’s gross before taxes income can be used forthe housing expenses plus all other obligations, such as;car payments, credit card payments, student loanpayments, etc. For example, an applicant who makes$10,000.00 monthly can spend $4,300.00. If theapplicant has a $2,000.00 in other expenses like carpayments, credit cards payments and such then theborrower wouldn’t be able to afford more than$2,300.00 a month for housing, including the principal,interest, taxes and insurance.



Keep in mind these ratios can start to get confusingfor someone with a higher income and moreresources. Some lenders pffer jumbo mortgageswith a 55% debt-to-income ratio, while others allowinterest only payments. Both can be particularlyattractive to high income borrowers who may gettheir income in a lump sum such as quarterly orannual bonuses. This particular loan allowsborrowers to make lower payments throughout theyear and larger ones when they happen to havemore money.



Searching for StatedIncome Mortgages



Although these loans are slowly becoming morecommon they certainly aren’t consideredmainstream exactly. These loans are more likelyoffered by smaller lenders. Borrowers can researchnon-conforming loans, no ratio loans, non-qualifiedmortgage loans or portfolio programs to find whichoption is best to fit their needs. It’s also a good ideato shop around for your lenders and alwayscompare their programs and costs to find whichprogram, loan, and lender will best fit your situation,want and needs.



T O L E A R N M O R ESTATEDINCOME.ORG

LENDER HOTLINE: 888-581-5008

C L I C K H E R E



Justin McHood is Americas MortgageCommentator and has been providingMortgage commentary for over 10 years.

INFORMATION PROVIDED BY: JUSTIN MCHOOD

MORTGAGE COMMENTATOR


http://mortgagecommentator.com/

LEARN MORE ABOUT MORTGAGE COMMENTATOR:

MORTGAGECOMMENTATOR.COM

FACEBOOK.COM/MORTGAGECOMMENTATOR

@MORTGAGECOM_

LENDER HOTLINE: 888-581-5008STATEDINCOME.ORG

LENDER HOTLINE: 888-581-5008

http://mortgagecommentator.com/

https://www.facebook.com/MortgageCommentator/

https://twitter.com/mortgagecom_

Understanding Stated Income Loans

Real Estate

Transcript of Understanding Stated Income Loans