What is a second mortgage based on a stated income? A second mortgage with a "stated income" doesn't require the borrower to show proof of the income listed on the application. This helps self-employed people and contract workers who get a 1099 instead of a W-2 the most, because it would be hard for them to prove their income. Most people use stated income mortgage loans, which are usually the least expensive type of mortgage that doesn't require proof of income.
Mortgage lenders know that it's hard for people who work for themselves or run a one-person business to prove their income. There are different kinds of loans for people with no income, such as state income loans or loans with no proof of income.
A loan officer should be asked what kinds of reduced documentation information are needed to get the loan. Lenders may ask for a 3- to 6-month reserve for principal, interest, taxes, and insurance (p.i.t.i.). If the monthly p.i.t.i. payment is $2,000, the lender may ask for proof of assets between $6,000 and $12,000.
A second mortgage with a fixed rate can be used to pay off a second mortgage with an adjustable rate or a home equity loan with a higher rate. If the interest rate on the second mortgage is lower than the variable rate, the monthly payments would be lower.
Home equity loans can be used for a lot of different things. They can be used to pay off credit card debt, combine high-interest credit lines, fix up a house, or go to school.
Everyone can get a stated income line, but lenders usually want the borrower to have a certain credit score. The interest rate is better the better your credit score is.
A stated income second mortgage loan is good for people who don't have a steady source of income but have enough assets to meet the lender's minimum reserve requirements. The income you put on your application must make sense given what you have. For no-income-verification loans, the borrower must have at least a certain credit score. It depends on the lender, but most will want the borrower to have a credit score of at least 580.
If your credit score is low, the lender will charge you a higher interest rate. If your credit score is good, you might be able to get a second mortgage with a fixed rate before interest rates go above 7%.
Most of the time, the tax effects of the different kinds of loans are taken into account. Before getting a mortgage, a borrower should talk to a tax expert, whether he is a first-time buyer or an experienced homeowner who is refinancing.
