• Recommended Links

A stated-income loan qualifies a borrower using the income the borrower states on the application form - as opposed to the income the borrower can document. With a stated income loan, the lender agrees not to attempt to verify the income the borrower has stated on the application.

Stated income mortgages are ideal for the self-employed and for home buyers in professions with salaries comprised mostly of cash tips, such as waiters and hotel porters. This type of loan applicants can often afford a mortgage, but don’t have the necessary pay stubs to document their true earnings. Self-employed business owners whose personal assets are commingled with the business assets often utilize “Stated-Income Stated-Assets” mortgage programs.

You are responsible for providing an accurate figure when the loan officer asks for your income amount. The loan officer should not coach you or fill in the amount for you. If the loan is audited and fraud is discovered you and or the loan officer can be held accountable under the law.

One of the reasons for a stated income loan is to minimize paperwork during the loan application process. A number of requirements that would normally be requested are W2 Statements, 1099 Forms, Bank Statements, and Pay Check Stubs. A stated income loan would not require the borrower(s) to find and organize this information to be approved for a loan. In many cases the interest rate difference is very minimal but normally slightly higher than a loan which requires proof of income.

On some stated income programs, the lender may require the borrowers to complete and sign Internal Revenue Service form 4506. This form gives the lender permission to access past and future tax returns of the borrowers. Having a signed and completed 4506 form in the file greatly enhances the marketability of the loan to the secondary market.

Some times this loan program has been referred to as “The Liars Loan”. It is important to understand, the existence of this loan, is for the purpose of helping borrowers, who otherwise cannot document their Actual Income. It is not designed to fictitiously inflate your income.

Stated income may be used in lieu of full documentation if you have higher credit scores. Lenders view you as less risky and therefore are willing to dismiss income documentation to speed up the loan process. The rate you receive is contingent on specific loan to value and/or down payment restrictions.

Lenders will often check with widely-available salary survey sources like salary.com to determine whether or not the income stated is consistent with the borrower’s profession and title.

Editors Note: Due to the mortgage and credit crunch, Alternative Documentation loans are no longer be available. If you’re in need of a refinancing your mortgage in Denver, CO contact us to discuss your mortgage options.

Alternative Documentation is expedited and simpler documentation requirements designed to speed up the loan approval process. Instead of verifying employment with the applicants employer and bank deposits with the applicants bank, the lender will accept paycheck stubs, W-2s, and the borrowers original bank statements.

Alternative Documentation (Alt Doc) loans differ from Full Documentation (Full Doc) loans in that Alt Doc loan programs do not require the usual income and assets verifications from a third party (the applicant’s employer or the depository bank where the loan applicant keeps the down payment funds). Full Doc loans often require such third party verifications and therefore the underwriting process takes longer.

It is now possible to obtain an alternative credit report accredited by the National Credit Reporting Association (NCRA).

Fannie Mae’s “My Community” program was designed for first time home buyers with limited credit depth. This program will allow up to 100% financing with little or no credit. You will still have to show at least 4 alternative tradelines but your interest rate is much better than going with a subprime lender.

The usefulness of this documentation type is obvious; it allows the borrower to speed up the process for underwriting. While you may ask your loan agent for this type of documentation, certain restrictions may apply in order to qualify.

Alternative documentation types can allow borrowers with non traditional sources of income to qualify for loans.

A good example of a borrower who would need to use alternative documentation would be a plumber who works a regular 40 hour per week job but also works after hours and weekends doing “side” jobs. Many such folks earn a significant portion of their overall income this way and would have a difficult time proving this income with traditional methods.

Another option to consider if it is difficult or impossible to verify your income, employment and assets is to No-Doc. A No-Doc loan requires No Documentation of income, employment or assets. You do need a good credit score to go No-Doc and will pay a slightly higher interest rate in some cases but if verification of income, assets and employment is a problem, consider going No-Doc.

Any alternative credit accounts you use must have a good payment history and be open for a minimum of 12 months. Canceled rent checks can also be used for an alternative credit account.

Alt A and subprime lenders also allow other documentation types such as bank statements, business bank statements, and/or verification of employment to satisfy income documentation requirements. Check with your broker to see what programs will work best for you.

Only in recent years have we as mortgage professionals been able to work with alt doc type loans. In the past you had to put down 20%, provide proof of everything and have great credit to buy a home. Now we have to ability to pick from multiple loans programs that fit just about anyone’s profile.

When applying for a home loan there are many ways you can show income. The most common way is called full documentation, where you show the following forms of income:- Salary- Overtime- Bonus- Commissions- Part time job- Dividend and/or interest income- Rental income- Child support or alimony- Public assistance- Retirement income- Disability income - Military income and allowances

For salaried borrowers, you typically need your last 2 pay stubs, within the last 30 days of application, and your last 2 years W2s. Your required documentation may be less or more depending on your particular circumstances.

You can also show income using bank statements. Some lenders accept 6 months and 12 months of bank statements. The lender then calculates deposits made over that time period and comes up with your monthly income amount. One thing to note is most lenders use deposits only and filter out transfers from other bank accounts.

If you are able to document income this will allow you to get better terms from a lender. The less you are able to document, typically, the higher your rate will be.

In order to document child support as income you typically need to provide a copy of your divorce decree or order that states the amount that is provided, copies of 3-12 months cancelled checks that reflect a consistent pay history. The income must also be expected to continue for a period of at least 3 additional years from the date of closing.

For self-employed business owners attempting to go the stated income documentation route when applying for a mortgage, it is important to have your business license or other information which may substantiate the legitimacy of your business with you when you contact one of our mortgage professionals

There are also loan programs out their, that do not require any documentation at all.

Some lenders accept alternative documentations to prove income, such as a written Verification of Employment with wage information signed by the employer. For self-employed borrowers, most banks would accept the business tax returns, a year-to-date Profit and Loss Statement, and/or a Certified Public Accountant’s statement as proofs of the borrower’s income.

Non taxed items such as Social Security can be grossed up to 125%. For example if you received $300 in Social Security you can actually claim $375 on the application. This is standard with nearly all lenders.

If you are self employed it makes it more difficult for you to document your income due to most business write offs causing you to show less income on tax returns. If your credit scores are high enough then you may qualify for alternate forms of financing such as stated income or no ratio loans.

Editors Note: Due to the mortgage and credit crunch, stated income loans may be very difficult to obtain. If you’re in need of a first mortgage in Denver contact us to discuss your mortgage options.

Stated income loan programs are offered on fixed rate mortgages, adjustable rate mortgages, or on negative amortization mortgages. They do not require income verification.

Most lenders also charge a higher rate on a stated income loan.

Stated income loans are very popular with business owners. Since they write-off a lot of their expenses at the end of the year on their taxes they sometimes have very little net-income to qualify for a full-doc loan.

Generally a no income, no asset (NINA) loan requires no verification of income or assets. However verification of employment is required and 2 years of same line of work is required. A No Doc loan is a NINA without verification of employment.

Some banks offer borrowers with high credit scores stated income loan programs with no adjustments, meaning the borrowers would not get “surcharged” or penalized for not furnishing proofs of income. These stated income programs offer interest rates that are identical to that of full documentation loans.

Stated Income programs are ideal for those clients with non-documentable income sources. Typically for those who may receive portions of income in cash.

A stated income loan normally requires a slightly higher FICO score to qualify for the same loan to value as compared to a full documentation loan or bank statement program.

There are two common types of Stated Income Programs: Stated Income Verified Assets Loan: (SIVA) - Loan approval is based on your stated income, credit history, and verified liquid assets (bank accounts, 401k, stocks, bonds, etc.). The Verified Assets should be consistent with the income claimed. Stated Income Stated Assets Loan (SISA) - This loan has no assets being verified. You only state your income and state your assets on the application. This program may have a slightly higher interest rate because the assets are not verified.

Some variations of stated income include:1)Reduced Doc - Income and assets are disclosed on the application but income is not verified. Assets are verified.2)No Ratio - Income is not disclosed on the application and assets are stated and verified. 3)No Income No Asset - Income and assets are not disclosed on the application and are not verified. Employment not stated or verified.

Lenders will look at the “stated” income to verify it is not out of whack, you cannot state $80,000 worth of income working part-time as a cashier. This has to be an accurate figure of income actually made.

Stated-income mortgages are for people who make the money they say they make, but that amount doesn’t show up on the bottom line of their income taxes.

Stated Income loans still must be approved by an underwriter. The stated income must make sense for the employment that the borrower has.

They say you can beat the tax man or you can beat the bank, but you can’t beat them both. If your income is difficult to document because of commission based pay or revenue from self employment, stated income loan programs are available which enable borrowers with sufficiently high credit ratings to borrow money at competitive rates. Programs are often available to borrow money equaling up to 100% of the value of your home, without the need to verify your income or your assets, or in some cases without the need to verify either.

Stated Income Loans are for borrowers with income sources that are not easily verified through normal channels. So, lenders allow borrowers to state their true income without verifying it. These loan programs are usually for borrowers with good credit and come with a higher interest rate.

I can understand that a Stated Loan could be confusing? Yet, I want to thank you for reading the information above. If you would like to continue this conversation than please contact me so you and I can discuss your financial situation. Please read more valuable information and when you feel comfortable I would like you to contact me.

Many self employed borrowers take advantage of stated income loans so they do not have to provide tax returns to qualify.

As you move down the line on the different programs, from SIVA to SISA to NINA the interest rate will move a bit higher each time. Depending on your credit scores and LTV (loan to value) you might be able to qualify for one but not another.

Stated income is a very popular form of loan qualifying. As you’re probably aware, most successful business owners write off a lot of their expenses at the end of the year on their taxes, causing very little net income to be used for qualifying for a loan. You also see this with borrowers that make tips, bonuses and commission as their sole form of income.

A cash amount that a homebuyer must have on hand after making a down payment and paying all closing costs. The reserves required by the lender must equal the amount a homebuyer would pay for principal, interest, taxes and insurance for a specified number of months.

The amount of reserves required may be dependent on the type of loan you are obtaining.

With investment properties which are financed 100% with no money down, you will often be expected to hold PITI reserves of Six months or more.

Your lender may require anywhere from 2 months of PITI to 6 months of PITI. And usually it’s more for a person that doesn’t have mortgage history on their credit.

As proof of reserves, lenders often require two current, consecutive bank/stock accounts statements showing the available funds. In the rare occasions where your bank and financial institutions do not offer past monthly statements on their websites, your mortgage broker can request a Verification of Deposits from them.

Lenders refer to the money you have left after you’ve bought your home as ‘reserves’. Reserves can include money in your checking/savings, mutual funds, retirement accounts, stocks, and bonds. Typically, borrowers with a higher amount of reserves are a lower risk. Lenders often look for you to have a minimum of two months of mortgage payments left in your account after the closing. However, not all mortgage programs require that you have reserves, so please check with your mortgage lender for all of your options.

One thing to keep in mind is that FHA does not require reserves.

Reserves are also called assets. Liquid assets are monies deposited in savings accounts or checking accounts held at Banks, Savings and Loans (S ampersand L) or Credit Unions.

Stocks, mutual funds, 401K accounts, money market accounts, SEP accounts, are also considered assets.

Lenders generally consider a borrower who has some liquid reserves to be less risky than one who does not. Therefore in many loan programs, borrowers who can prove that they have reserves can get better terms on their loan. This is especially true in loan programs where the borrower is not required to prove their income.

If you have good credit but not the required reserves, you may want to look at a Stated Income Stated Asset(SISA) or No Income No Asset(NINA) loan where assets are not verified.

It is important to remember that there are many different types of loan programs available and they all have different requirements. As a general rule of thumb, it is ideal to have 6 months of reserves. Most programs only require 2 or 3 months so if you have 6 months worth stashed away, your loan will go much smoother. Also, for 401k and other retire accounts, most lenders will only consider 75% of the full value towards reserves. This is because most retirement accounts have early withdrawal penalties.

When dealing with Option ARM’s, it is important to remember that the PITI is calculated from the fully indexed rate. Even if you have the option to pay a minimum payment, you must have enough reserves for the fully amortizing payments.

Completing a loan application is the first thing you’ll do when refinancing your mortgage. You may also need to provide a variety of documentation to help your mortgage lender approve you for a home loan. The documentation will vary depending on the lender you choose, your loan program, and your personal financial situation.

It’s also handy to have available your latest mortgage payment coupon, your mortgage note, and any payment coupons for credit cards you are paying off.

The extent of the documentation you will need to provide to your mortgage broker to get approved for a loan will depend on the type of loan you and your mortgage broker decide to use. Your mortgage broker will help you decide what amount of documentation will best fit your financial situation. Common types of documentation are Full Doc, Alt or Light Doc, Stated Doc, and No Doc. Full Doc is exactly what it sounds like you will need to provide full documentation of your income assets, etc. Alt Doc or light doc is an alternative to Full doc where rather than providing pay stubs and/or W-2s bank statements can be used to show income. Stated Doc is when as the borrower you tell the broker what your income is and do not provide additional documentation. The income must be with in reason for your type of employment and job title. For example you can not be a part time dish washer making 100K per year. No Doc is when no documentation is provided for your employment assets, etc. As the amount of documentation decreases the Lenders take on additional risk. With the additional risk the lenders become more stringent on other qualifying factors such as credit. Rates also increase with the increased risk to the Lender.

The following is a list of documents generally required when applying to refinance. You may or may not need them all, but for a fast and easy loan process, have these items available when you’re ready to complete your mortgage application. * Proof of income Typically, you’ll need to show original pay stubs for the last 30 days. * Copy of homeowners insurance Verifies that you have current and sufficient coverage on your home. * Copies of your W2 forms Required for each loan applicant and helps your lender verify past employment and income history. * Copies of asset information Including accounts holding money for closing costs, statements for savings, checking and 401K accounts and investment records for mutual funds or stocks. * Copy of title insurance Helps your mortgage lender verify the taxes, names on the title and legal description of the property.

When it comes to re-finance, it is often a good idea to consult a mortgage professional to identify a loan program that would achieve what is intended to accomplish. In addition, whether a refinance makes good economic sense also depends on the anticipated costs of the refinance transaction, which only a mortgage loan officer can provide.

Contact a mortgage professional for a complete listing of documents which you may be required to produce specifically for your state, county and loan program.

Documentation that may be needed for a refinance may include: Last 2 Years W-2’sLast 2 pay stubs Last 3 months statements for all asset accounts to include but not limited to: checking, savings, money market, 401K, stocks, etc. (must provide all pages for each account)Bankruptcy paperwork (all pages of filing and discharge)Divorce Decree (all pages of the Decree/Judgment and any attachments.)Social Security/Pension award letters Proof of 3 months receipt of child support/alimony Satisfaction of any liens, judgments and/or collections that have been paid Property tax bill Warranty Deed Mortgage Note Owner’s Title Insurance Policy Prior survey Clear copy of your Driver’s License or State issued ID and Resident Alien/Green Card

Cash-out refinancing is often used for home improvements or to consolidate high interest debt.

In addition you may need your HUD (closing statement) from the closing when you last purchased or refinanced the house. This depends on what type of loan program you are choosing, usually in cash out refinance situations.

There are two types of refinances:- Rate/Term, where you reduce your rate, payment or term (ex: 30 year fixed to a 15 year fixed)- Cash-Out, take out more equity on your property

Editors Note: Due to the mortgage and credit crunch, reduced documentation loans have been eliminated. If you’re in need of a Denver Colorado Mortgage Broker contact us to discuss your mortgage options.

There are many programs available that are for people who may not qualify for the standard full documentation required by many different lenders. Some of reduced documentation loans compensate for the lack of supportive documentation that may need to be required. Some of the examples are as follows: Stated Income, Verified Assets or SIVA Stated Income, Stated Assets or SISA No Ratio, No Income, No Assets or NINA True No Doc

Stated-Income Stated-Assets mortgage is a type of mortgage program in which the borrower does not need to furnish proof of his income and assets. In other words, no pay stubs, W2’s, tax returns, bank statements, are needed to document the borrower’s financial ability to repay the loan. The applicant’s income is merely disclosed, or stated, on the Uniform Residential Loan Application.

When your scores are high enough the lender may even offer a reduced documentation program at no additional cost to you. They look at the higher scores as you being responsible enough to know what you can afford and what you can not. Also the higher scores equates to less risk for the lender.

Reduced documentation loans are not an opportunity to falsify income in order to obtain larger loans. This type of mortgage fraud is being more closely investigated by lenders and the FBI.

Reduced Documentation loans are for borrowers that have unverifiable income or assets. Reduced documentation also are for borrowers that do not want the hassle of locating documents or who want to keep their information private. They are willing to pay a premium for this usually paid for with higher interest rates or points.

A Stated-Income loan for a self-employed borrower means you do not have to provide income documentation but you do have to provide proof of employment. Past two years business license will usually suffice.

Self Employed borrowers typically use reduced documentation loans due to tax deductions reducing the actual income/profit of their businesses.

Cash tip earners also use reduced documentation loans since their cash income is not documented.

If your credit scores are high enough many lenders will offer your reduced income documentation. This reduces the amount of documents needed to prove your employment history, income, or assets. Ask your Preferred Mortgage Professional if your credit qualifies for a “rapid” processing feature.

Many lenders even offer reduced documentation loans for borrowers who have salaried, W-2 type employment. Why would a lender do this? Because in addition to the salary the borrower may have other income which cannot be documented. Examples of such income include a side business, room rental, income from loans to family or others and many other situations.

Another example of reduced documentation, or alternative documentation, is using 6, 12 or 24 months bank statements to verify income. With a bank statement program most lenders will add up the total amount of the deposits for said number of months and then divide that total by the total number of months being used and they will use this amount for your average monthly income. Some lenders will only use a percentage of the avg. monthly income calculated but most lenders will use the full amount.

The Reduced Documentation loan is geared toward the self-employed borrower and those whose work situations don’t fit the standard mold. It reduces the amount of paperwork you need to gather, eliminating many of the steps required when applying for a loan.

Choosing a reduced documentation loan should not be used in order to afford more of a house than you would be able to on a full documentation loan. These loans are designed to accommodate those customers with hard to prove income.

When using bank statements to qualify for a limited documentation loan you typically can use your personal bank statements up to 100% of the deposits over the specified period of time (6, 12 or 24 months) and when using business accounts it is typically 75% to 80% of the deposits.

Often the lenders offset their risk with making these loans by increasing the interest rate or reducing the LTV.

A No-Doc loan allows the borrower to apply for a loan and not have to state their income, employment, assets or even submit bank statements. This type of loan is often time appealing to Self-employed, single women who do not have the required two year track record and many successful entrepreneurs who simply don’t want to reveal how much they make. In doing a No-Doc loan the borrower will have a one percent higher rate on average than most conventional loans.

No doc loans are often confused with stated income loans but there is a difference. In a stated income loan the method of earning income must be proven but the borrower is allowed to simply state the amount of that income without providing any proof. A no doc loan means that no documentation at all regarding the amount or the method of earning the income is required.

In some cases a lenders guidelines for a no doc loan even waive the need for a full appraisal, or the requirement that the borrower have the property for at least 12 months before refinancing. This is a useful program for investment property owners who need to draw cash out of the equity of a property that was rehabilitated. Most lenders will not use the new appraised value with out additional documentation and “seasoning” of the property for at least 6 months and usually 12 months.

Individuals who live off of equity and debt investments very often have no means of verifying employment or income due to a variety of factors, and are excellent candidates for no-docs / NINA type loans.

No doc loans are much easier to process than the normal loans. There is very little paper work in comparison and not much to verify.

Past credit history and credit score is very important when applying for a no documentation loan since the lending decision is based on extremely limited information.

A NO-DOC loan is good for borrowers who just relocated, or have recently went self employed.

No Doc loans require the least documentation and are for buyers with good credit. The buyer provides minimal information and the lender does the rest. No Doc loans are great for people who want maximum privacy.

In a soft real estate market, homeowners with no equity in the homes are much more like to default on their mortgages. Because of the intrinsic risk of default associated with No Documentation Loans, most lenders require that the home buyer commit a bigger down payment towards the property.

You have the right, under the Fair Credit Reporting Act, to dispute the completeness and accuracy of information in your credit file. When a credit reporting agency receives a dispute, it must reinvestigate and record the current status of the disputed items within a “reasonable period of time,” unless it believes the dispute is “frivolous or irrelevant.” If the credit reporting agency cannot verify a disputed item, it must delete it. If your report contains erroneous information, the credit reporting agency must correct it. If an item is incomplete, the credit reporting agency must complete it.

Don’t Ignore the Problem. If you just hope the problem of errors on your credit history will disappear, then be prepared to wait a long time. Credit information can remain on your report for as long as seven years and up to ten years in cases of bankruptcy.

The credit agencies update every 30 days. If you Dispute an account on your credit report, the agency is obligated to respond to your request with in 30 days. With accurate proof of a faulty account, you will be able to remove that from your credit report

You are allowed a copy of your credit once a year from each credit bureau. Along with your credit report will be a dispute form.

If there is incorrect information on your credit report such as a payment that was reported late that should not have we will be able to correct the information within 3-5 days by going directly through the 3 major credit bureaus and get a rescore to reflect what your credit score should be.

If you are unable to spend the time to write the letters yourself then you might want to hire a credit repair company to do this for you. They will act on your behalf to write the necessary letters to the 3 credit bureaus. There are many companies to choose from these days and it might be in your best interest to consult with your Mortgage Broker as to which company will give you the best service.

The best thing to do to keep an eye on your credit report is to join a Credit Monitoring service such as PrivacyGuard.com they even provide a $1 trial for 2 months. You get all three credit reports with the scores included.

Improving your credit score can be as simple as spreading a large amount of debt on one credit card, over three or four different credit cards.

Prior to applying for a mortgage fixing all credit report errors will optimize your chances of obtain the best financing terms available.

If you find an error, the Fair Credit Reporting Act requires credit bureaus and organizations that provide information to them to correct the mistake. But you have to get the ball rolling by requesting an investigation.

Under The Fair Credit Reporting Act effective October 1, 1997, a credit reporting agency has 5 days from the date of receipt of a written investigation request to contact the appropriate credit grantor about investigation the complaint(s) and receive a reply back within 30 days of the original notification date. Within 5 business days after the completion of the investigation, the credit bureau (i.e.: Equifax, Trans Union, Experian) must send a written report to the consumer with its findings with a copy of the revised report if there were nay changes made.

If a credit bureau can not verify that a disputed item is correct as reported, it must modify or remove it from the consumers’ file. If the tradeline confirms a later date that the information was indeed correct, the credit bureau will add the information back into the consumers’ file. It will notify the consumer in writing as to the changes, within 5 days of the change.

DO NOT expect information to be deleted just because a collection account or debt has been paid. Derogatory items will remain on your report for 7 years. The 7 year clock on a derogatory item falling off your report does not start until the item has been satisfied.

The consumer must write a letter of dispute regarding the erroneous information reported by a specific credit reporting agency. The letter must reference; Your full name, Address, Social Security number, the tradeline Account numbers, Brief statement of what is incorrect. Copies of supporting documents (if any) The letter MUST be sent by overnight mail, with return receipt requested. This verifies when the 30 day clock starts ticking.

When disputing questionable items in a credit report, always remember to dispute with all three major credit bureau agencies. When applying for a mortgage, all lenders look at items reported by all three credit bureaus.

Make sure to keep the “acknowledgment” letters that the bureaus send to you at about 2 weeks. There is a date they have officially acknowledged they received your letters in which the 30 days in the FCRA should start.

Rapid rescoring services are an effective, legitimate ampersand growing sector of the consumer credit industry. The good news is that they work. But you can’t use these services directly. Companies that offer rapid rescoring work directly with mortgage lenders and brokers, not with consumers. If you are serious about fixing errors on your credit report, contact your mortgage broker or lender and talk to them about credit repair today.

The credit bureaus are not government run agencies, but are for profit, multi billion dollar industries that make money off of selling your personal information. It is proven that they make more money off of you with bad credit, rather than good credit, so don’t believe everything that they tell you in results you receive back. Make sure to spend time, in detail, looking at your results and ensuring things like the date of verification have the current date. 50% of Trans Union’s verified accounts have old verification dates, which means they never investigated that account, yet put verified as a result anyway.

It is up to the consumer to keep a close watch on their credit. You are allotted one free report a year. But checking your credit once a year is not enough. Experts recommend that you check your credit report before you go out looking for a loan. That means before buying that car or refinancing your home. Also, just as a rule of thumb, you should check your credit at least twice a year in addition to the times listed above. If you are not shopping for any loans, it would still be wise to check your credit every four months. Be sure to utilize the one free report from each of the credit scoring bureaus.

If a creditor verifies a previously deleted item after the 30 day window, they can add it back on. A notice of this Reinsertion must be sent the consumer within 5 days.

The “30 day rule” is a credit repair myth and is not used by knowledgeable credit repair companies or consumers. This 30 day rule only causes reinsertions if not used properly. If the bureau is forced to delete an item at day 31, then most likely most of those accounts will reappear later, with proper reinsertion notification. The very next line in the FCRA states that if the creditor or credit bureau verifies an account late, or after the 30 day timeline, they can simply add it back on.

Your credit picture is very important and should be kept up the entire time. Do not wait until the last minute (I.E. you want to apply for a mortgage next month). Credit repair is a process and you should allow appropriate time to remove items from the bureaus

Credit reporting is an imperfect system and there are times when you’re credit is tainted and it’s not your fault. Equifax, Experian, and Trans Union don’t always report the same information.

• Full Documentation: Both income and assets are disclosed and verified, and the income is used in determining the applicants ability to repay the mortgage.
• Stated Income - Verified Assets: Income is disclosed and the source of the income is verified, but the amount is not verified. Assets are verified and must meet an adequacy standard such as, for example, six months of stated income and two months of expected monthly housing expense.
• Stated Income - Stated Assets: Both income and assets are disclosed but not verified. The source of the income, however, is verified.
• No Income - No Assets: Neither income nor assets are disclosed.
• No Ratio: Income is disclosed and verified but not used in qualifying the borrower. The standard rule that the borrowers housing expense some specified percent of income is ignored. Assets are disclosed and verified.
• No Income: Income is not disclosed, but assets are disclosed and verified and must meet an adequacy standard.
• Stated Assets or No Asset Verification: Assets are disclosed buy not verified, income is disclosed, verified, and used to qualify the applicant.
• No Asset: Assets are not disclosed, but income is disclosed, verified, and used to qualify the borrower.
• No Income - No Assets: Neither income nor assets are disclosed.

A handful of banks offer the simplicity and convenience of Stated Income mortgages to borrowers with the same low interest rates as full documentation loans. Applicants must have good credit profiles, often with credit scores of above 720. There is usually also limitations on the subject property, such as no 3-family or 4-family houses.

If you qualify, generally the fast closings occur with stated income or no documentation required loan programs. As a rule of thumb, the more documentation provided, the longer it may possibly take t close the loan, however we are often able to lend you more money at a better rate if more documentation is provided.

If the broker working on the loan determines you can fit into a full doc loan vs. a stated loan the move is permitted to get a better interest rate. However if you have to go from full doc to stated once in underwriting that is not usually permitted.

If your credit scores are lower than 680 you can expect a higher interest rate on stated income and no documentation loans.

With automated underwriting if there are either enough assets, an excellent credit history, or sufficient equity or a combination of them the lender may reduce the documentation to things such as just one pay stub, no asset verification or even a drive by appraisal which can speed the process up.

When stating assets on your loan application you are usually required to document proof of them. If the money is in a checking or savings account then usually the underwriter will request 2 months of bank statements to show the money is in there and has been there. A 401k statement is required (the most recent statement you have) to document a 401k account. If you do not want to deal with documenting assets during your loan process simply do not list them on your application. Sometimes providing assets may provide a better approval for a lower rate than if you don’t document assets though.

Alternative Documentation can be the use of pay stubs, W-2 forms, and bank statements instead of Verifications of Employment (VOE) and/or Verifications of Deposit (VOD) to qualify a borrower for a mortgage.

The method of documentation that a lender’s underwriter will perceive to have the lowest risk factor is W-2 income backed up by two years of actual W-2 statements and one complete month of paycheck stubs. The underwriter will want to be comfortable that they are issued by a legitimate company or organization. Pay stubs or W-2 statements that are handwritten rather than computer or machine generated will cause a red flag.

These documentation types should not be used for fraudulent purposes. The lender as well as the loan officer and client could be held liable for fraudulent loan practices.

There are many types of “alternative” options. Some lenders allow bank statements in place of pay stubs, some allow trade lines that do not appear on credit. There are many creative ways that your mortgage broker should know about to best help your situation.

Generally, the more documentation you can provide to the lender, the smaller the risk is to the lender, which in turn gives you a better rate.

A qualified mortgage professional will look at your whole financial situation and can make recommendations on that type of income will suit you best.

Other sites: Mortgage Broker | Fixed-rate mortgage | New Credit Card Minimum Payments | Quick Closing | Why should I refinance | Closing Costs | MIP | Mortgage banker | Delinquency | Increasing your homes value | Stated Income Loan | Why choose a mortgage Broker | VA| Pay Option Arm Calculator

Next Page →

• Denver Lender LLC

  We are a mortgage company located in Denver, Colorado. Click here to compare mortgage rates.
  

• Search for:

• Tags

  adjustable rate mortgage appraisal colorado commercial compare consolidation construction conventional credit score debt denver fha first mortgage first time home buyer fixed rate mortgage foreclosure home equity home equity loan home loan investing jumbo lending loan amount meltdown mortgage mortgage backed securities negative amortization prepayment prime property purchase rate rate increase real estate refinance reverse mortgage second mortgage shopping stated income Subprime va value

• Recent Posts

  • No Country for Mortgage Brokers
  • File under…
  • Monday Morning Quarterback
  • Keeping up with…
  • Video: The Subprime Meltdown of 2007
  • Pavilions, Argonaut, and more
  • Why don’t we save?
  • Spanning the web
  • Mad World
  • What will 2008 bring…

• Legal

  The content provided on this website is presented for informational purposes only. The information provided on this website should not be construed as offering legal, financial or other advice to be relied on by the reader to make or refrain from making any decision or to take any action. The investment, mortgage or financial services or strategies mentioned in and throughout this website may not be suitable for you.