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Must I go full doc on my mortgage or can I go stated?

Congress is in the process of passing a law to stop lenders from making any more “no-doc” or “stated income” loans in the future.  While some experts consider new laws over-reaction, others state that these type of loans were significant in the housing market and mortgage collapse. 

A “no-doc” loan is one in which the borrower does not provide documentation of their income, with the “stated income” part coming from the fact that the lender would take whatever income the borrower stated on the application as true.  There is no doubt that many borrowers abused this loan type, and many of those have contributed to defaults and foreclosures.  However, other self-employed individuals with complicated tax returns simply found it a better route to a home loan than trying to explain their business taxes to a lender.  Either way, it’s all over now.

If you’re self-employed, or have other income verification hurdles, why not start a process with a mortgage broker to begin to develop a file that will be ready when you need a mortgage?  When you’ve located the perfect home and are ready to write up a contract, it’s a lot tighter of a time line than you might like to verify your income for a lender.  It will be much less stressful to begin that process now, and have the file substantially ready when you need it.

You can no longer just state what you make, so visit us and let us give you current income verification criteria so you can build the documentation into your routine, and have it ready when you need it.

Income verification will include your submission of the following:

  • If you are salaried or W-2 wage earner, then gather the last 30 days worth of your most recent pay stubs showing your year-to-date income, and pay stubs from other employers if you've had more than one in this year plus W-2 Forms for the past 2 years 
  • If you are mostly a commission, bonus or tip earner then gather your most recent pay stub showing year-to-date income & last 2 years of your tax returns with W-2s and or 1099 Forms
  • If Self Employed then gather 2 years tax returns plus 2 years of any 1099s you've received

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