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.
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.
In order to be approved for this type of loan you need to have very good credit and a very high credit score. The lender looks for this because they do not request you to bring in pay stubs or W2s. They increase their risk when they don't verify income, so they look to shore this up in other areas.
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.
Given that the lenders can't verify income, they will often endeavor to shore up and verify everything else they can. For example, they sometimes put in place restrictions on the minimum number of years in business or by what percent the new monthly shelter payment can go up by.
If you are self-employed or are paid mostly on commission, do not give up hope on getting a home equity line of credit. Talk to your local financial institution, mortgage broker or search the web for a lender that offers stated income loans or Alt-A products. You may find it is not as difficult to be approved as you first thought. - 16928
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.
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.
In order to be approved for this type of loan you need to have very good credit and a very high credit score. The lender looks for this because they do not request you to bring in pay stubs or W2s. They increase their risk when they don't verify income, so they look to shore this up in other areas.
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.
Given that the lenders can't verify income, they will often endeavor to shore up and verify everything else they can. For example, they sometimes put in place restrictions on the minimum number of years in business or by what percent the new monthly shelter payment can go up by.
If you are self-employed or are paid mostly on commission, do not give up hope on getting a home equity line of credit. Talk to your local financial institution, mortgage broker or search the web for a lender that offers stated income loans or Alt-A products. You may find it is not as difficult to be approved as you first thought. - 16928
About the Author:
If you are self employed, get more details on the stated income equity line at Pat's mortgage website.
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