Why should I take a stated income loan?

Stated income loans have both pro's and cons. It's important you speak with a mortgage professional to decide which way you should qualify. There are plenty of advantages to taking a stated income loan.

One of the primary advantages of doing a stated income loan is for people who are self employed. Often times a self employed person will have many deductions that offset their income. While this is an advantage when paying taxes, it is a disadvantage when applying for a loan because your tax returns will not properly reflect your true income. With a stated income loan you can state what you really earn.

Stated Income mortgage is ideal for people who receive a large portion of their income in the form of cash. Waitors and street vendors, for instance, can usually benefit from Stated-Income loans because they mostly have income that are difficult to document.

A disadvantage of the stated income loan is that some home buyers tend to buy too much "house" than they can afford because they are able to qualify based on their credit score and not by the amount of monthly payments they can afford.

It is very wise that you seek the professional opinion of a qualified mortgage agent who can help you better understand the immediate and long term impacts of a stated income loan.

Stated income loans pose a slightly higher risk to the lender, so you can expect to pay a slightly higher interest rate.

An alternative to a stated income loan is to use 12 to 24 months of bank statements to document your income.

Sometimes a No Income No Asset loan is a good alternative to stated income loans.

» DISCLAIMER: The information contained in this article on 'Why should I take a stated income loan?' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.