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.
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.
Small business owners are able to reduce their taxable income by claiming legitimate business expenses. This presents a problem when it comes to qualifying for loans and mortgages as their taxable income often falls below what is required to be approved for additional credit. The stated income lending products resolve 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.
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. - 16955
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.
Small business owners are able to reduce their taxable income by claiming legitimate business expenses. This presents a problem when it comes to qualifying for loans and mortgages as their taxable income often falls below what is required to be approved for additional credit. The stated income lending products resolve 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.
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. - 16955
About the Author:
If you are self employed, get more information on the stated income home equity credit line at Pat's mortgage blog.
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