Stated Income Mortgage Risks

What Are Stated Income Mortgage Loans?

Stated income mortgage is an alternative mortgage loan which you can qualify for without having to document your monthly income. You just sign a statement that you earn that much, and you can get your mortgage, provided that you have at least a middle FICO credit score such as 600 or more.

A good financial tracking record is a must for getting approved for a stated income mortgage, as the lender trusts your own word in respect to the amount of money you earn, so there has to be something at least to prove that you're making loan payments in time and that you don't skip them.

Another condition for stated income mortgage loans is to make between 5% and 20% down payment or equity from the property's value. Depending on how much money you can bring, your interest rate will be lower or higher. If you make a down payment of only 5%, you may end up with a significantly more expensive loan rather than if you make the down payment larger.

Small business owners, salesmen who work on commissions from their sales or work at home persons are a few examples of people who may find a stated income mortgage very attractive.

Borrowers shouldn't lie when applying for stated income mortgage loans

Don't get into debt bigger than you can take. Stated income mortgage lies may lead to foreclosure

Stated income mortgage or rent? Think well before you act.

Is Stated Income Verified By The Lender Before Giving You The Mortgage Loan?

Although you don't need to provide any additional papers documenting your income, other than the personal statement, the lender will almost always check on the source of your income.

If your stated income source is verifiable, this doesn't mean you can't lie regarding the amount of money itself. Nobody's dgoing to check on that, but this is may be the biggest danger and risk of the stated income mortgage. Why? Simply because if you exaggerate and get the loan, you'll be in difficulty of making the monthly payments, because they will be too high for your actual level of earnings. In the long run, you may not be able to prevent foreclosure and you'll lose your house. This is why loan officers or mortgage brokers shouldn't encourage borrowers to lie. If they do it, then they are not honest and this should be an alarm signal for you, if you wish to take a stated income mortgage loan.