Stated income home loan
stated income home loans are those mortgage or home loans that are provided to those people who are self employed. stated income home loans are also applied by those people that do not wish to disclose their income. It is important to understand here that since mortgage application of people mentioned above do not contain any documentary evidence of income and lenders qualify them for loan amount on the basis of income stated by them, these loans are called as stated income loans.
Many people take stated income loans in United States for fulfilling their different types of requirements like home buying, home construction or renovation etc. However, in present times, due to mortgage market conditions, some of lenders have disposed off with their stated income loanschemes. But this does not mean that stated income home loans are not there. By making extensive search, a person can easily get a low rate stated income home loan.
There are many advantages of stated income home loans. First of all, borrower is not required to provide any documentary support for his income. Thus, a person can easily qualify for large home loan amounts, irrespective of his income level. However, he must ensure that he is able to repay these loans in time otherwise it may lead to foreclosure. Second important benefit of stated income home loan is that borrower is able to get approval in a fast manner as compared to traditional home loans.
This results in gaining home ownership or fulfilling requirements in a short span of time. There are some disadvantages of stated income home loans also. First of all, interest rate attached with these loans is generally higher than traditional home loans. Also, this is quite obvious because a lender is providing money to a person without ensuring that he would be able to repay the same or not. Thus, lender would recover the risk involved through high interest rate. In fact, people who do not want to disclose their income do not mind paying high interest rates. Second disadvantage of stated income home loans is that down payment requirements are also higher as compared to traditional loans. It has also been observed that stated income home loans are generally provided to people having less than perfect credit.
Some important aspects
stated income home loans are also called as Liars loans. This is because terms and conditions attached with these loans invite a person to lie. Some people also call these loans as no doc or low doc loans. When any lender accepts application of a person for above type of loan, it agrees not to make any attempt for the verification of the income of the borrower. In fact, stated income home loans have been designed for those people who have the ability of affording a mortgage and also have acceptable credit but are not able to meet the underwriting standards of the traditional or full doc home loans. It has also been observed that apart from self employed people, many salaried persons are not able to provide tax returns for two years and other documents required and thus, go for these loans.
There are some lenders in United States that require a person to fill the Form 4506 for providing stated income home loan. This form authorizes lender for making a request to IRS for the verification of tax returns of borrowers for past two years. This is done for ensuring that income level has been reported truthfully by the borrower. If borrower defaults in making payment, lenders can use the form 4506 for necessary action. Another important aspect that should be understood here is that lenders do check the source of income while providing stated income home loans. In most of cases, lender requires that a person is self employed in the same business for at least two years. In case of salaried applicants, it is required that they are in same line of work for minimum two years. Though lenders do not verify the income through documents, they are well aware of the levels of income any type of business or profession. If any borrower chooses to state the maximum income, lender may require him to provide information regarding financial assets.
Recent developments
stated income loans have been able to attract those people in good numbers that work on commission basis of cash and who do not have any consistent salary. These loans are provided for buying primary and second home s and for investment properties. In past few months, lenders like AAXA have discontinued providing these loans due to prevailing conditions in the mortgage market. Similarly, Quicken loans is one of important mortgage lending institutions that have stopped offering stated income home loans. Numbers of foreclosures have increased to alarming levels and as a result, financial institutions are not able to recover their money due to great decrease in real estate prices. In fact, some financial institutions have declared themselves bankruptcy and some have been shut down.
Thus, a person has to make great efforts for finding stated income home loans in United States in present times. It is better if a person approached those lenders that specialize in providing sub prime home loans. For example, Steele home loans Inc is one source that offers sub prime loans including stated income loans. It is located at 90 Mission DR. Suite 2, Pleasanton CA. It offers real estate loans across United States and offers loan program to self employed people including credit challenged ones. loans can be applied online at realfastloan.com. No credit check is made at the time of approval. Similarly, Atlanta-Georgia-mortgage.com is another source offering stated income home loans in Atlanta. People who are not able to verify at other sources due to their income can easily apply for stated income loans. This center can also be called over phone at 877-927-4200.
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