What Is A Stated Income Mortgage And Where To Get One?

Stated income mortgages are so-called because they require no formal documentation of wage, salary, investment, or other income. Financial privacy is a common borrower motivation for seeking a stated income home loan. Celebrities, professionals who maintain lucrative practices or others who are similarly situated are often hesitant to make full income and asset disclosure. In such cases, stated income mortgages are an ideal option.

Ordinary consumers may also seek a stated income home loan. Self-employed individuals who shelter much of their income from taxes are a prime example. Likewise, prospective borrowers who are parties to pending litigation may want to avoid formal asset documentation. In addition, commission-compensated sales personnel with seasonal or irregular income often seek stated income mortgages.

Conventional mortgage lenders request detailed information about applicants’ financial resources. Prospective borrowers must produce bank records, tax returns, pay stubs, Profit and Loss statements, or other such documents. Lenders require this to accurately assess repayment ability.

By contrast, stated income mortgage lenders rely upon unsupported applicant statements of income and assets. This creates considerably higher lender risks since, for obvious reasons,  stated income mortgages tend to have a higher incidence of default. When a homeowner fails to repay a mortgage loan, the lender initiates foreclosure. This is a complicated legal process whereby lenders assume title to the home pledged as loan collateral.

Proceeds from a subsequent sale are applied against the former homeowner’s outstanding debt. There are significant costs associated with foreclosures. These expenses usually result in lenders sustaining a net loss. Consequently, stated income mortgage lenders charge higher interest. Overall, sufficient profitability is thereby maintained to insure absorption of individual defaults.

Borrowers with excellent credit may avoid the relatively high interest rates of stated income mortgages. A sterling debt repayment history offsets the lack of full income verification. For many borrowers, the extreme flexibility of a stated income home loan make higher interest worthwhile. For instance, semi-annual or bi-monthly payment schedules are not uncommon stated income mortgages.

If you feel that a stated income home loan is right for you, conduct a search engine query for “stated income mortgages,” or “stated income mortgage lenders.” Bankrate.com is an excellent resource for finding stated income mortgage lenders. The site features a searchable nationwide database of lenders that offer stated income mortgages. By entering your zip code, you may view interest rates, minimum credit qualifications, and loan fees of multiple lenders. Side-by-side comparisons and daily updates greatly facilitate your quest for a stated income mortgage loan best suited to your needs.