No Income Verification Loans for Self Employed and Stated Income Second Mortgages
What is a stated income second mortgage? A stated income second mortgage is one that does not require the borrower to prove income stated on the application. This is most advantageous to self employed and contract workers who receive a 1099 instead of a W-2 as they would have a difficult time proving their income. Stated income mortgage loans are the most commonly used and usually the least expensive of the no documentation types of mortgages.
Stated Income Second Mortgages: Understanding No Income Verification Loans
Mortgage lenders understand that it is difficult for individuals who are self-employed or operate a one-person firm to verify their income. Different types of no income loans are offered including state income or no income verification loans.
Inquiries should be made to a loan officer as to the types of reduced documentation information required to secure the loan. Lenders may require anywhere from 3 to 6 month reserve for principal interest taxes and insurance (p.i.t.i.). If the monthly p.i.t.i. payment is $ 2,000 a month; the lender may require proof of assets anywhere from $6,000 to $ 12,000.
A fixed rate second mortgage is a way to refinance higher adjustable rate second
mortgages or home equity loans. If the interest rate on the second mortgage is
below the adjustable rate, lower payments monthly would be a benefit of the
Home equity loans can serve a number of purposes. They can be used to reduce credit card debt, consolidate high interest credit lines, make home improvements and pursue educational endeavors.
Stated income lines are available to all borrowers but the lenders usually require the borrower to have a minimum credit score. The higher the credit score the better the interest rate offered.
A stated income second mortgage loan is suitable for borrowers who have no verifiable income and have assets to meet minimum reserve requirements of the lender. The stated income on your application must be reasonable in terms of your assets. Qualifications for no income verification loans require the borrower to have a minimum credit score. While it varies from lender to lender, most lenders will require the borrower to have a credit score above 580.
The lower the credit scores the higher the interest rate the lender will require. If your credit score is high you may be able to take advantage of a fixed rate second mortgage before the interest rates increase above 7%.
If you are a consumer who owns a home, then you might be tired of
getting mortgage solicitations to refinance your mortgage. Most likely, you
are a savvy homeowner who locked into a 30-year mortgage a few years at 5%
with a fixed interest rate loan. You may be wondering why these mortgage
lenders and brokers think you would be interested in refinancing your 5% loan
with a 6.5% mortgage rate.
Consideration is usually given to the tax consequences of the different types of loans. A tax adviser should be consulted before a borrower commits to a mortgage whether he is a first time buyer or an experienced homeowner refinancing.
Mortgage companies are blasting direct mail campaigns that are targeting
many homeowners in Southern California. You may not need to refinance your 1st
mortgage, but chances are, you will want to access cash in the coming months.
A fixed rate second mortgage or variable home equity credit line can get you
cash, and a tax deduction without requiring you to refinance you low interest
Second mortgage are effective financing vehicles for funding home construction, purchasing a second home or refinancing variable rate credit card debt. Home equity lines of credit are convenient, for people with changing plans. HELOC's can improve cash flow because only the interest is due on the portion of the line that you actually accessed. This offers a financing arsenal for borrowers needing cash on a whim for investing, and purchasing rental properties. A homeowner armed with a home equity line of credit protects their family with a safety net of cash reserves in case a emergency or tragedy arises.
Clients should establish a home equity credit line whether they think they need it or not. If they never use the credit line, then it never costs them a penny. There are no crystal balls in the world, so you have to plan for both opportunities, and financial hardships. Get a second mortgage or line of credit, while your credit scores are high. Why wait until you are late on a bill and your credit scores are low. Take the small window of opportunity, and get your finance vehicles tuned up, because when you wake up tomorrow the opportunity may have already passed.
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