If you do not have a W-2, are an investor, or are between jobs, you might be considering applying for a stated income loan in Florida. While stated income loans offer a fast and easy application process, you may be wondering whether they have any drawbacks. Let’s take a closer look at the two potential drawbacks that are most often cited with respect to these types of loans and what they really mean for you.

Drawbacks of Stated Income Loans

1. Defaults are more likely. You will often hear people say that borrowers are more likely to default on stated income loans than other types of loans. Indeed, some people think that they are the same as the “liar loans” that were around prior to 2008. Actually, today’s stated income loans are very different from those types of loans. In fact, old-fashioned stated income loans no longer exist through reputable lenders and brokers. Before 2008, the phrase “stated income” was very literal. No documentation was required at all. As a result, lenders were approving customers for loans that they literally could not afford. It is no wonder many of these borrowers found themselves unable to keep paying on their mortgages. Anyone who continues to offer “liar loans” today is in violation of the Dodd-Frank Act. Does it happen? Yes. But you can avoid this simply by working only with lenders that have strong reputations and which do require proof of your income. That proof of income comes in the form of bank statements, which is why modern stated income loans are also called “bank statement loans.” Those are the types of loans we can connect you with. Since you will be verifying your income through this alternative means, you will only qualify for a mortgage you can afford. So long as you continue to earn a similar income in the future, you should be able to pay off your loan in full without defaulting, just as you would if you applied for a mortgage through the traditional application process.
   
   Bottom Line: Customers frequently defaulted on old-fashioned stated income loans before 2008. With the Dodd-Frank Act, those loans largely went away. Today’s modern stated income loans are actually bank statement loans. They do require income verification (but no W-2), and are a safe form of financing offered by reputable lenders.
2. Interest rates and fees might be higher. The other potential drawback that you might hear about when it comes to stated income loans is higher interest rates and fees. This is less likely to be an issue if you are getting a fair and legal stated income loan through a reputable lender than it would be if you were signing a loan with a predatory lender. With your bank statements, you are verifying your income. That means that you are not an unknown, and a reasonable assessment of your risk level as a borrower can be made. You can also take steps to offset higher interest rates and fees. Provide a longer period of bank statements (i.e. 24 months instead of 12). Make a larger down payment on a home if you can. Maximize your credit score and reduce your debt-to-income ratio. Wait to apply for a mortgage until you are on a stable career path. You also can shop around for the most competitive interest rates and fees instead of going with the first mortgage offer you receive.
   
   Bottom Line: Stated income loans may have higher interest rates than their traditional counterparts, but there are strategies for offsetting those rates. You can find some very competitive offers with the help of a mortgage broker in FL with a large network of quality lenders.

Lending Bankers Mortgage Can Connect You with a Competitive Stated Income Loan in FL from a Trusted Lender

Lender Bankers Mortgage works with a network of trusted lenders throughout Florida. Whether you are in Miami or elsewhere in the state, we can walk you through the modern stated loan process and help you find a mortgage with competitive rates. Have questions about stated income loans, or ready to apply? Please give us a call today at (786) 220-1100. We look forward to working with you.

Over the past few years, stated income loans have become popular both in Florida and throughout the country. Stated income loans allow you to apply without providing a W-2 or tax returns to prove your income. You are taken “at your word,” though you typically need to show your income through bank statements.

Who uses stated income loans? Individuals in diverse walks of life may choose them over regular loans. These include self-employed borrowers, independent contractors, freelancers, entrepreneurs, business owners, investors, and others who find the process more convenient and expedient.

While stated income loans are fast and easy to apply for in comparison to traditional loans, they are not necessarily easier to qualify for. Requirements may remain just as stringent. Lenders do want to be confident that you are able to afford the loan.

Applying for a Stated Income Loan in Miami, FL

To maximize your chances of approval and to facilitate a fast, smooth application process, take the following steps to prepare before you apply for a stated income loan.

1. Check your credit score and raise it if necessary. Your credit score is a key financial data point which lenders take under consideration regardless of whether you are applying for a traditional or stated income loan. It is a numerical representation of the level of risk which you present as a borrower. If your credit score is fair or poor, you should work on raising it before you apply. Those with good credit are 1-more likely to be approved, and 2- generally offered better terms and rates. To see where you stand, order your credit report and score, and check over the info in your report for accuracy. You can contest inaccurate entries to have them removed, which can boost your score.
2. Ensure that you can cover the down payment amount. Your loan is probably going to include a down payment. If so, try and estimate how high it is likely to be, and then make sure that you have enough cash on hand to pay it without straining your finances too much.
3. Build up sufficient cash reserves. Speaking of cash on hand, some lenders may ask to see cash reserves. This should come as no surprise; if you are your own boss, you probably face significant levels of uncertainty in your business. Demand for your products or services may rise and fall, and you may go through dry periods. And if you go out of business, you’ll have no unemployment insurance to fall back on. How much cash do you need in reserve? A good rule of thumb is anywhere from 6 months to 1 year’s worth of reserves. They should be sufficient to allow you to fully pay all of your bills each month (including the amount due on your loan plus interest). Once you have run the calculations and determined that you have these reserves, you will need to pull together the paperwork which proves that you are good to go in this regard.
4. Look at your debt-to-income ratio (if this is helpful). In traditional lending situations, your debt-to-income ratio is one of the most important considerations in determining whether you should be offered a loan. It is a simple way for a lender to determine whether you can afford to take on more debt without destabilizing your finances. It is possible that you are choosing to apply for a stated income loan in part because your debt-to-income ratio isn’t truly representative of your financial means (if you’re a real estate investor, this scenario is common). If that is the case, working toward improving your ratio might not make a lot of sense. But it is important to at least know what it is, and to have an explanation and supporting documentation ready. And if you do have a solid debt-to-income ratio, it may help you qualify for a more competitive loan than if you didn’t. If that is the case, be sure and emphasize it when you are applying for your loan, even if you are using the stated income method. You should be able to back it up with bank statements.
5. Gather documents that verify your source of income. Even though you are not showing your income with tax documentation, you are going to be expected to verify its source. Have paperwork ready to show that you are indeed gainfully employed or self-employed.
6. Get bank statements ready which are sufficient to document your income. A stated income loan is also sometimes referred to as a “bank statement loan.” This is because you are expected to back up your word when you state your income by showing bank statements that verify that your income is what you claim it to be. So, get these prepared before you apply.

Contact Lending Bankers To Apply For a Stated Income Loan

Ready to skip the W-2 and apply for a loan the easy way? Call us today at (786) 220-1100 to schedule your consultation for a stated income loan. Let’s get you the financing you need to achieve your goals.

At Lending Bankers Mortgage, our goal is to find a way to help every customer who contacts us to obtain the financing they need for their commercial and residential needs quickly and easily.

For that reason, we offer convenient loan financing options which you may not find at your regular bank or credit union, like stated income loans. With a stated income loan, you do not need to verify your income using W-2 forms or pay stubs.

Tips When Applying for Stated Income Loan

If you’ve never applied for a stated income loan, here a few things you should know before you get started.

Finally, one more advantage of stated income loans is that allow you to exercise greater discretion over your own finances. When you apply through the traditional loan approval process, whether or not your application is accepted ultimately comes down to whether the lender thinks you qualify based on their formulas and models.

Those formulas may apply to borrowers in the middle of the bell curve, but they may not be applicable to your financial situation. While you can attempt to explain this, many traditional lenders simply will not be willing to listen. They are not used to working with customers in your shoes, and lack the experience or perspective to grant your request for consideration.

Applying for Stated Income Loans

Apply for a stated income loan today through Lending Bankers Mortgage. We know how frustrating it can be to apply through a loan through the traditional process only to be rejected because you cannot furnish a W-2 or prove you can afford a loan through formulas that do not fully account for your financial situation.

With our network of more than 130 lenders throughout South Florida, we can bring you competitive interest rates and down payments on stated income loans. Whatever your financial situation, there is a loan product out there which is an ideal fit for your needs.

Ready to apply for a mortgage today without a W-2 or pay stub? Give us a call at (786) 220-1100, and we will schedule your free consultation!