Stated Income Credit Lines
People who get most of their income from commissioned sales or own their own business often have a very difficult time being approved for credit. When they go to apply for a mortgage or line of credit, they are met with resistance by the bank, because they can not provide supporting documentation of their annual income. Lenders have recently addressed this problem, by introducing stated income credit products.
If you want to borrow against the equity in your home you may be eligible for a stated income line of credit. The lender will not require you to provide proof of your income, but instead will take your word for it. Then, once approved, they account will be administered like any other.
It is a common business objective to strive to keep taxable income as low as possible by deducting eligible expenses. This is at odds with lenders who like to see as big an income as possible. They more income the easier it is for the borrower to service their total debt. Stated income credit products solve this.
The lender does not ask to see pay stubs, W2s or other income documents. What they require instead however is very strong credit. Your credit rating needs to be well above average to offset the additional risk the lender takes by not verifying your income.
Interest rates and fees on stated income loans are often greater than on usual loans. This helps to offset some of the increased risk the lender takes as well. All in all, however they are by no means excessive.
Some financial institutions will also put criteria on how long the applicant needs to have been in business. The may also include other factors such as payment shock, where the new payment can not be more than fifteen percent of your existing shelter payment. Essentially, because they are opening themselves up to additional risk by not verifying income, they endeavor to ensure that you are as strong as possible in all other areas of the approval criteria.
So there are options out there if you are self employed for getting home equity lines of credit. Be sure to contact your local mortgage lender and see if they offer stated income products. If not you can search online for one who does are consult with a mortgage broker. Regardless of your choice, just be aware there are options.
If you want to borrow against the equity in your home you may be eligible for a stated income line of credit. The lender will not require you to provide proof of your income, but instead will take your word for it. Then, once approved, they account will be administered like any other.
It is a common business objective to strive to keep taxable income as low as possible by deducting eligible expenses. This is at odds with lenders who like to see as big an income as possible. They more income the easier it is for the borrower to service their total debt. Stated income credit products solve this.
The lender does not ask to see pay stubs, W2s or other income documents. What they require instead however is very strong credit. Your credit rating needs to be well above average to offset the additional risk the lender takes by not verifying your income.
Interest rates and fees on stated income loans are often greater than on usual loans. This helps to offset some of the increased risk the lender takes as well. All in all, however they are by no means excessive.
Some financial institutions will also put criteria on how long the applicant needs to have been in business. The may also include other factors such as payment shock, where the new payment can not be more than fifteen percent of your existing shelter payment. Essentially, because they are opening themselves up to additional risk by not verifying income, they endeavor to ensure that you are as strong as possible in all other areas of the approval criteria.
So there are options out there if you are self employed for getting home equity lines of credit. Be sure to contact your local mortgage lender and see if they offer stated income products. If not you can search online for one who does are consult with a mortgage broker. Regardless of your choice, just be aware there are options.
About the Author:
If you are self employed, get more information on the stated income equity line at Pat's mortgage website.
posted by Credit Counseling at
8:20 AM
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