If you’ve been shopping around for home loan options, the odds are that you’ve stumbled across stated income loans once or twice. While there are some really nice benefits anyone can garner from selecting this course of action, there are drawbacks and other information which you should take note of before making a commitment to this loan. Understanding the facts is an important part of deciding whether or not this is the right loan for your financial situation.
They Save You Time
One of the main benefits of applying for stated income loans is that they promise to save you time. While this is true, do you really need the extra time this provides? Consider how this saved time is going to benefit you during your purchase, and whether or not it’s worth the potentially higher overall cost.
The Application Requires Tax Records
Lenders will require your proper, complete tax records during the process to ensure you have the financial history to handle this type of loan. This allows them to take issues like foreclosures and other discrepancies into account before approving or denying your application.
Claims Might be Checked
Just because you say that you earn a certain income doesn’t mean your lender is going to take your word for it. Expect to have these claims checked before your application for stated income loans is approved or denied. Not all cases are reviewed, but many are, so honesty is the best policy in this situation.
They May Cost More in the Long Run
Because this arrangement is inherently risky to banks and other lending institutions, they tend to have higher interest rates and monthly repayments than traditional bank loans. This means that, even though these loans are easier to qualify for, you may end up repaying more in the end than you would with a boring old bank loan.
No Two Applications are Alike
You can try to prepare for any questions that come your way, but keep in mind that no two applications are alike. Stated income loans are simply another form of the no-doc loan, which covers a wide variety of different loan types. Therefore, it’s hard to predict exactly which application you’ll be handling when you set out to obtain funds in this manner.
These are all important things that you should remember throughout the process. Familiarize yourself with these facts and seek advice and information from a professional before completing the process in order to increase the chances of having your application accepted.