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Stated Income Loans 2015 - Blown Mortgage
The housing crisis is constantly being blamed for the “bad” loans or the “liar” loans as the No Income, No Asset or Stated Income/Asset loans were called. But today they are making a slow comeback. These loans are not going to be as easy to obtain as they were a few years back, but they are being made available by many lenders, mostly the lenders that can no longer afford to turn potential borrowers away. There has been a major restructuring to the programs, making them much more difficult to get approved for, but they are available for small business owners and investors.
What Lenders want for Stated Income Loans
In order for any borrower to be eligible for a stated income loan, they need to have many compensating factors. It is not going to be as easy as it was in the past to fudge the numbers on your paperwork and expect to have a loan handed over to you. Borrowers will need to do their due diligence in order to qualify for the loan. This means that they must have outstanding credit, typically a score over 700 and plenty of assets in the bank. The assets are meant to be used as a down payment as well as for reserves. Most banks are asking for six to twelve months of mortgage payments to be in the bank at the time of approval. They are also requiring a 30 percent down payment in most cases.
A New Name
Because of the “bad” name that Stated Income loans received during the housing crisis, most lenders are considering them an “alternate documentation or income loan.” These loans are meant to help those borrowers that own their own company or use housing investments in order to make an income. On paper, these borrowers might not look like they make a lot of money, but in reality, they are able to afford a mortgage. Many people that are against opening up the possibility of a stated income loan again worry about the fact that even 1 year of payments in the bank is not enough to protect a bank against default on a mortgage that is set to last 30 years.
The Reason for the Change
It might seem strange that lenders are willing to put their neck out for borrowers again, after being burned by so many defaults not that many years ago. The reasoning behind opening up the possibility for a stated income loans once again is to help out the little guys – the ones that have opened up their own business since the economy tanked and so many people have had to become entrepreneurs in order to survive. These people are trying to make a living and are doing whatever it takes to make it affordable. In these instances, they might take many deductions or write off a lot of expenses in order to minimize their income tax liability.