In the start of the 21^st century there were a number of loan packages that were developed to meet the needs of certain market segments.  One of the more popular loans was the stated income loan.  Also known as no doc loans, stated loans were designed for people who were self employed and had difficulty reporting their income.  For the right borrower, these loans are perfect for helping them get a loan approved that they would not have otherwise qualified for.

Poor lending practices combined with negative media coverage has given stated income loans a bad rap over the past few years.  One of the reasons for the housing crash in the U.S. was lenders unscrupulously approving loans to sub-prime borrowers.  The problem with stated income home loans arose when mortgage brokers began signing clients who should not have qualified for these loans.

Some brokers would use the stated income technique as a means to artificially raise the income of their clients to ensure the loan was approved.  This would even occur with people who have regular jobs with proper W-2 documentation for standard loans.  This is one of the reasons why this particular loan was coined the “liar loan”.

The problem with these loans was that the typical borrower would inflate their income by up to 15% to 20%.  Although a lot of the mortgage brokers knew they were inflating the numbers, the responsibility of the loan was then passed on to the banks, who then sold these loans under separate packages to other institutions. The lack of responsibility was one of the key reasons for these loans to be one of the key players in the housing market collapse.

Although many lenders have stopped offering stated income mortgage loans, you will still find a few lenders that do offer stated income loans.  The specific segment that benefits most from the stated income loans are individuals who are self employed or small business owners.  Individuals who are working for themselves often aren’t able to document their income with W-2 forms that traditional mortgages require.

A ratio that is commonly used to determine loan eligibility for non-stated income loans is the debt to income ratio.  If this ratio is too high, the borrower is deemed too risky for the loan.  Entrepreneurs who are self employed often have a large amount of debt because of business loans that they might have.  This can often make skew their debt to income ratio negatively affected their loan application.

If you are currently looking to apply for a stated income home equity loan, it is important that you consider the pros and cons of applying for one.   Although you might be able to state your income in the loan application, there are often a number of other requirements that you need to go through in order for your loan to be approved.

Steps to Getting a Stated Income Mortgage

Although the name of the loan suggests you don’t need to show proof of income in the application, this is far from the truth.  The stated income mortgage loan usually requires two years or more of annual earnings.  Instead of showing the bank an annual income with a pay stub and W-2, the borrower will need to provide tax returns and bank statements.

These steps are designed to ensure that borrowers aren’t claiming they have money that does not exist.  You will also need to disclose all of your profit/loss statements that you have with the business.  The borrower will also have to list all of the assets and debts that they currently have.  All of your current properties and any debts that you have need to be listed in the loan application.

Since the housing crash many lenders are skeptical about offering these state income loans to borrowers with poor credit.  A good credit rating is essential if you are looking to get approval for a stated income loan.  Lenders want to see a history of good credit before they will offer one of these higher risk loans.

Individuals who are looking to apply for a stated income loan should be prepared to pay a premium on their interest rates.   As a general rule of thumb, the less information you show on your loan application, the more risk the lenders bear.  This risk is passed on to the borrower in the form of a high interest rate for the loan.

Other Loan Types

No-Ratio Loans – Another type of loan that you will come across is the no ratio loan.  In this loan type you are not required to verify your income throw any pay stubs, tax returns or W2s.  The lender takes the approach of not asking what the borrower earns in the application.  The reason these loans are called no ratio loans is because the debt to income ratio is not calculated in the application.

In the loan application for a No ratio loan the borrower will have to list their assets that they own.  Any stocks, money in the bank, real estate, and businesses will be listed in the application.  Usually the lender will require some paperwork to verify the assets that are being stated in the loan.

The main reason the no-ratio loans exists is to provide an easy way for high credit worthy borrowers to get access to a loan.  This is not a loan that is designed for marginal borrowers who are looking to get a loan approved.  This is the loan designed for the small business owner who doesn’t want to deal with all the paperwork of getting their financial statements in order for the loan application.

No Income/No Asset Verification (NINA) Loans – These are the riskiest loans on the market for lenders.  Because there is no verification of the borrower’s income or assets in the application, the lender is relying on the borrower’s credit score.  This is a loan that is not intended for anyone who isn’t a trustworthy borrower.

The difference between the no ratio and NINA loans can become quite blurred depending on the lenders criteria.  These loans are designed for the borrowers who are looking to have complete privacy in their loan application.  A person why doesn’t want the banker looking through all their private information would consider one of these loans.

Beware of Predatory Lenders

Anytime you see a loan advertisement that promises a guaranteed low doc or no doc loan you should think twice.  These loans should only be given out to the best credit worthy borrowers.  If a lender is offering a low documentation loan to an average borrower you should think twice about applying.

Finding a trustworthy mortgage broker will ensure that you don’t get taken for a ride when you are applying for loans.  Always be on the lookout for balloon interest rates that start initially low, but inflate up after a period of time.  These predatory lending practices are one of the main reasons why the housing market crashed.

Although stated income loans can be difficult to find, they are still a great option for a certain segment of the population.  If you think you can qualify for a stated loan you should consider look at the different lenders that offer the loans.  Be prepared to pay a higher interest rate than the traditional loans that are available from lenders.  Compare different lenders to try and find a rate that will work best for you.

When it comes to getting loans approved there are many options that you have available.  Most people who are looking at getting loans apply for traditional full documentation loans.  These loans require you to prove your income and your assets in the loan application.  One of the difficulties that people have regarding traditional documentation is proving their income.  If you are self employed or do contract work you will probably find it difficult to prove your entire earnings.  This is where stated income loans work very well.

The benefit of applying for a stated loan is that you don’t have to worry about proving your income in the loan application.  These loans can vary by the degree that they require you to prove your income.  In some loans you might be required to show limited documents.  This means that you might need to show information like your tax returns and all of your assets.  In no doc loans you might be able to get away without proving your income or your assets.

Whether or not you decide to apply for a stated income loan depends on your situation.  If you have no trouble proving your income then you should go ahead and apply for a traditional loan.  Because full documentation loans require you to fully prove your income and your assets, the interest rates are also lower.  Stated loans have a higher interest rate then most traditional documentation loans that people use.

The major benefit that stated loans offer people is the ability to get approve for a loan without have to worry about all the paperwork.  The convenience factor is very important for anyone who is looking to apply for a loan.  There are many different types of stated loans that you can apply for.  People who are looking to get a mortgage loan could consider getting a stated home mortgage loan.  These loans would allow the borrower to show previous tax returns and bank statements to prove their income.

One drawback of stated loans is that some people consider these loans to be “liar loans.”  It is often believed that people who apply for stated income loans are doing so in order overestimate their income in their loan application.  For this reason many lenders want to ensure that they borrower has a good credit rating when they apply for the loan.  You will need to have a good history of making loan payments if you want to get accepted for one of these loans.

In the past couple of years there has been a financial crisis that has affected millions of borrowers around the country.  Many different loans have been affected by stricter lending criteria imposed by various lenders across the country.  One particular loan that has been hit hard is the stated income home loans.  These loans are traditionally designed for people who have a hard time trying to prove their income in loan applications.

One of the biggest reasons why these loans took such a hit over the past couple of years is because some people were lying on their loan application.  Over stating your income became a common practice from a lot of various borrowers.  This created a lot of financial problems when people started to go into bankruptcy and lose their homes.  The overstating of income was one of the leading causes of people becoming financially over leveraged.

Given the recent economic turnaround that has been occurring the stated income loans have been making a comeback.  Although these loans are riskier for lenders to approve, there is a market for the no doc loans.  The reason why people apply for these stated loans is because a lot of people who work in certain industries have a difficult time proving their income.  By using stated loans they can actually have a convenient way to apply for loans without having all the traditional documentation that is normally required.

One of the downsides to getting a stated loan is that they have higher interest rates than traditional loans.  This means that you will be paying more for your loan over the long run than normal loans.  This works well for some people, however, it can be quite the burden for others.  Getting a stated income loan approved can also be difficult.  If you are looking to get your loan approved you should ensure that you have a good credit rating.

When lenders are looking at these loan applications they want to know that the borrower is going to repay the loan.  This is why they will take a detailed look at your current financial position.  This will include looking at your credit rating, income level and current debt.  In order to get stated income home loans approved it is important that you satisfy these criteria.  If you are able to meet the requirements for the stated loans, you should have no problems finding a lender to approve your loan application.

Are you looking for a loan that doesn’t require the traditional documentation of regular loans?  Applying for a stated income loan will allow you to get your loan approved without having to worry about all the regular documentation.  These loans are perfect for people who are self-employed or having a difficult time proving their income in their loan application.  You will need to have a good credit rating to ensure that lenders will approve your loan.

When it comes to no documentation loans or stated loans, you need to consider the different options that you have.  Most traditional loans require borrowers to submit W-2s which allow them to prove their income to lenders.  Some occupations are difficult to prove the income for.  For example, people who work in restaurants usually have a very hard time trying to prove their income because of the tip money that they receive.

If you are interested in applying a stated loan there are a few things that you should know before applying.  The first thing that you should be aware of is that many lenders are not willing to approve applications from borrowers who have low credit scores.  This means that you shouldn’t bother applying for a loan if you don’t have a good credit score.  Having good credit is very important in the eyes of many lenders who offer these loans.

Stated income loans have often taken a beating in previously years because many lenders consider them to be “liars’ loans.”  The reason they are given this name is because many borrowers who apply for these loans often over state their income in the application process.  For this reason it is quite common for lenders to take the income that is stated and actually run an income check on it.  If you state your income higher than the industry average for your occupation you will have your loan declined.

Honesty is very important if you are going to getting approval for a stated income loan.  People who are honest will be able to have lenders trust them and approve their loan applications. If you are looking at applying for a stated loan you should start your search online.  The internet has a variety of different lenders that are available to approve your stated loan.  Get comprehensive quotes online to ensure that you get the best rates for your loan.  Remember that these loans are very beneficial for people who have a difficult time proving their income.

Are you looking to apply for a home loan?  There are many different options that people have available when it comes to home financing.  Most traditional loans will require you to have full documentation and prove all of your assets and your income.  For people who are looking at getting a loan without the traditional documentation that is regularly required, a stated income home loan is the solution.

These stated loans are very beneficial to people because they offer people chances to get loans approved without having to prove their income.  In certain occupations it can often become quite difficult to get loans approved because of the income requirement.   If you work in a job as a server, then probably have a difficult time declaring all the tip money that you make.  Getting a stated income home loan is a solution for this problem.

The one concern that many lenders have regarding these stated loans is that they represent a greater risk.  Because you aren’t actually fully proving your income level, there is always the risk that some borrowers would aren’t truthful on their application form.  For this reason there are some lenders who won’t offer these stated loans.

Another downside of these loans is that you will have to have good credit to apply for the loan.  If you suffer from a very low credit rating then don’t expect your loan to be approved.  Only people who have very good credit rating will get approval for a stated home loan from lenders.  The reason for such a strict requirement is because lenders want to ensure that the borrowers have a good history of making payments for their debt.

The higher risks also mean that the borrowers are charged a higher interest rate.  This can often mean that your home loan will cost you a lot more over a longer period of time.  Only people who need to apply for these loans should use them.  If you can get approval for a traditional loan, it is better for you because of the lower interest rates that are available.

If you are looking at getting a stated income home loan you should start your search on the internet.  There are many different lenders who are starting to offer these loans to borrowers.  As long as you have a good credit rating many lenders will be willing to approve your stated loan.

For many borrowers it is often very difficult to get traditional loans approved.  If you are working in an industry that doesn’t have full documentation of earnings, it can often be very difficult to prove your income.  People who do jobs such as self-employed earnings, contractors, restaurant waiters, and commission based salespeople will often find it very difficult to prove their income.  If you have a good credit rating, you may be able to qualify for a stated income mortgage loan.

The benefit of stated loans is that you don’t have to worry about fully proving your income.  There are different types of stated income loans that are available.  Some of the loans only require you to submit partial documentation for the loan, while others will even require less documentation.  These loans are perfect for people who traditionally have a difficult time trying to prove their income level.

One of the biggest advantages that these loans have is the ability to require less paperwork.  If you get approved for a stated income home loan you don’t have to worry about going through the traditional application process that requires you to have a lot of paperwork.  Your lender will ask you to complete a verification of employment and have your employer leave the salary section blank.  People who are self-employed will be required to show verified tax returns for at least two years to prove your income level is accurate.

Another benefit that these loans offer is 100% financing for some borrowers.  If you are fortunate enough to have a good credit rating then you should consider applying for different stated loans.  You might be able to get full financing for your loan if you find the right lender.

Probably one of the biggest downsides to stated income mortgage loans is the high interest rates.  If you have a high interest rate it will cost you more in the long run.  This will means that you should consider the different options that you do have before deciding to settle down and choose a stated mortgage.  People who are able to get traditional loans might want to do so because they might be able to get lower interest rates for the mortgages.

The process of finding a good stated income mortgage loan is possible if you are willing to look around.   Finding the right lender will require you to do a comprehensive search online and find a lender that is willing to approve your loan.  If you get comprehensive quotes from a variety of different lenders you can find one that will approve your loan.