If you own your own business, are self employed or get most of your income from commissioned sales, then you have probably run into trouble when applying for credit. Specifically when you are looking for mortgage refinance options you have difficulty being approved because you can't prove your income by traditional means. Financial institutions are beginning to realize this problem and are coming out with unique solutions called stated income loans and lines of credit.
A stated income HELOC doesn't require that you supply the usual paperwork that states how much money you make a year. You advise him or her what your annual income is and they use that number at face value. Then when you are approved you can access the equity you have in your home via a lone of credit.
Accountants work to keep business owners' incomes as low as possible to minimize the amount of tax payable. This causes problems with banks, because what is left over is often not enough to justify the amount of credit that could realistically be carried. Stated income loans attempt to find a happy middle.
The banker does not request traditional documentation proving income. In its place they insist upon strong credit worthiness. The higher the FICO score the better. They put this criteria in place to offset the greater risk they are undertaking by not verifying income.
You may find that the interest rates on these types of loans tend to be higher than on their traditional counterparts. The usual fee schedule can be higher as well. Again to offset the additional risk.
Some lenders will have unique criteria for these loans such as how long the applicant needs to have been in business. Additionally some banks may impose limits on how much greater the new monthly payment may be compared to how it was before. The lender simply wants to make sure that all the areas they can verify, are as solid as possible.
You can meet with a broker or search online for a mortgage lender that offers stated income products. It is encouraging to know that the financial institutions are taking the unique needs of the small business owner seriously. You might just have to work a little to search them out. - 16732
A stated income HELOC doesn't require that you supply the usual paperwork that states how much money you make a year. You advise him or her what your annual income is and they use that number at face value. Then when you are approved you can access the equity you have in your home via a lone of credit.
Accountants work to keep business owners' incomes as low as possible to minimize the amount of tax payable. This causes problems with banks, because what is left over is often not enough to justify the amount of credit that could realistically be carried. Stated income loans attempt to find a happy middle.
The banker does not request traditional documentation proving income. In its place they insist upon strong credit worthiness. The higher the FICO score the better. They put this criteria in place to offset the greater risk they are undertaking by not verifying income.
You may find that the interest rates on these types of loans tend to be higher than on their traditional counterparts. The usual fee schedule can be higher as well. Again to offset the additional risk.
Some lenders will have unique criteria for these loans such as how long the applicant needs to have been in business. Additionally some banks may impose limits on how much greater the new monthly payment may be compared to how it was before. The lender simply wants to make sure that all the areas they can verify, are as solid as possible.
You can meet with a broker or search online for a mortgage lender that offers stated income products. It is encouraging to know that the financial institutions are taking the unique needs of the small business owner seriously. You might just have to work a little to search them out. - 16732
About the Author:
If you are self employed, learn more about the stated income equity line at Pat's mortgage website.
