Stated Income Home Equity Loan

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Summary: Stated income home equity loan is a loan made without the presence of the usual documentation ONLY by applicants with high credit ratings.

Stated income home equity loan may be a breeze for the majority of loan applicants, but for some individuals, this can be a major pain in the ass. So what’s the science about Stated Income Home Equity Loan? For a rather hefty explanation needed to get this point though, the mechanics are really simple.

The best home equity loans are generally for conforming loan applicants. That is requiring a proof of income, the documentation of asset or collateral and other loans/debts (debt ratio) –generally adhering to the Federal National Mortgage Association’s (FNMA) strict lending guidelines. So for a home equity loan to push through, it requires a great deal of documentation. Sometimes, procedures could even take months to get approved. That’s how tedious home equity loans can get.

But if for some reasons an applicant chooses not to disclose any of the documents (whether the absence of such or for personal privacy reasons is beyond our explanation) will he/she can still avail an equity loan? The answer is a definite yes. But certain criteria should be met before ‘no doc’ home equity loan should be considered. One such criterion is impressive credit history.

Stated income home equity loan is a loan made without the presence of the usual documentation, thus called “No/Low Doc” Home Equity Loan or “No Ratio” Home Equity Loan or NIV (No Income Verification) or just stated income home equity loan. This loan type is useful. If for example, an applicant cannot disclose an income statement (or debit statement) because he is self-employed or is a businessman who gets cash by other means than a monthly income, then stated income home equity loan is a useful option.

That’s what makes stated income home equity loan also a popular choice –for those who can afford it. The absence of documents makes the loan process swift.

But surely one such good option should have its share of drawbacks? Of course it has. The criterion for good credit rating is one thing most loan applicants can never maintain. And stated income equity lenders are rather strict with this one. Furthermore, since the absence of the usual documents are tolerated, the interest rate that accompany most stated income home equity loan is large since lenders will generally consider the applicant as risky borrower. However risky or not, a good number of aggressive equity lenders are offering more competitive rates for stated income home equity loans to applicants with high credit ratings.

Let’s wrap this up with an illustration. If Steve Jobs would like to have a loan with the Bank of America, will he be awarded one with just a $1 annual? If you are looking for a broker who specializes in stated income loans Calabasas has many to choose from.

Mortgage Brokers – The Nuts and Bolts

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Using a mortgage broker to shop for home loans can make the borrowing process a lot less stressful than doing it yourself. Here are the nuts and bolts on getting a good broker.

Competent Mortgage Brokers

There are a couple of obvious situations where going with a mortgage broker makes perfect sense. If you have less than perfect credit, a mortgage broker is going to be able to open your eyes to numerous loan options a traditional bank would never tell you about. If the idea of handling the mass of paperwork involved in the loan application scares you, a mortgage broker is definitely going to be a savior since they will take on that burden. Still, how do you know if you are talking to a competent broker?

The first issue to address when considering whether to use a mortgage broker is scope. Scope refers to the number of different mortgage lenders the broker works with concerning home financing. Generally speaking, the more lenders the broker works with, the better mortgage options you will get and, ultimately, the better financing. A good mortgage broker should have at least eight different lenders they work with and be able to go find others should your particular situation call for a special financing package. If the broker identifies only two or three lenders, you need to move on to the next broker.

The second biggest issue is the mortgage broker’s knowledge of the lending industry. By knowledge of the industry, the broker should be able to identify multiple lending programs and the various lenders and options for each. For instance, you might ask the broker who he works with and the loan options available for a person with a 580 [poor] credit score. Further, ask the broker if he has arranged funding for such loans before and the specifics of the loans used. If the broker shows a depth of knowledge and starts rattling on about options, you’ve found the correct broker. If they don’t, you haven’t.

Broker Fees

Mortgage brokers are paid upon performance. If they don’t get you a loan, they don’t get paid. The positive aspect of this is you can be the mortgage broker is going to bust their tail coming up with a solution for your problem. The negative aspect is you need to make a determination as to whether the options give to you are good loans for your situation. The commission of a mortgage broker is typically paid out of the loan proceeds, but costs such as appraisals are your responsibility. The broker should have no problem telling you their commission rate on the loan.

If you don’t trust banks to give you the best deal or have been turned down by a lender, a mortgage lender in Calabasas is a great way to find good deals. Understand the nuts and bolts of what they do and you are on your way to getting a loan.