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Ted Spradlin's Blog

By Ted Spradlin | Mortgage Broker
or Lender in Walnut Creek, CA

The Lack Of Stated Income Loans In the Mortgage Market

I spoke to a listing agent a few days ago who was looking for a non-Hard Money Stated Income loan program for the prospective buyer in Escrow to his listing, of which he's also the seller. The buyer had a Stated Income loan approved with East West Bank in Southern California, but East West had cut the appraisal by 20%, even though the buyers already had two appraisals supporting a much higher value, which happened to be the sale price.

This is the conundrum of dealing with the only bank that I've found that still offers Stated Income loans. It's either, "We'll go Stated Income and cut value by 20% or the borrower needs to document their income and we'll go with the value on both appraisals."

In the past couple years, I've spoken to Loan Officers at East West Bank in Los Angeles and Seattle to get more info on their Stated Income program for clients of mine. They said the bank would, "lend up to 60% LTV but will almost always cut the appraisal by 10-25%."

That’s a nice gesture on their part and I know that it’s their money so they get to make the rules.  But, this is the real world, and like so many times in today’s market, those guidelines and that underwriting matrix is a deal-killer. 

So what's the alternative?

·      Add additional borrowers to the loan application who can meet the income requirements.

·      Pay cash.

·      Take out a private money or hard money loan.

Private money loans aren't always the most desired option, especially for people with 780 FICO scores accustomed to getting the very best in rates and fees.  However, they sometimes are the only remaining option in this extremely tight mortgage credit market that lacks Stated Income loan programs.

The most competitive private money lenders start at 5.99% with 3-4 points cost for investment properties and usually won't go higher than 60-65% LTV. Technically they are Stated Income loans that are more concerned about the quality of the property and the equity position, but they still like to see that the borrower can service the debt.  

Comments

By Self Employed Mortgage Loans,  Thu Jul 25 2013, 18:18
Everyday we speak to self-employed people here in California that are successful and have good credit but are routinely turned down by banks and brokers when applying for a loan to purchase or refinance their home.

The typical problem that self employed people run into is that they write off business expenses on their income taxes each year. It's a catch 22. If you write off most or all of your businesses expenses, it appears to a mortgage lender that your yearly net income isn't sufficient. On the other hand, if you do not claim many write offs for expenses, you immediately set yourself up for paying higher income taxes.

However, that no longer has to be an issue in your search for a home loan. We can now help locate specialized loan products tailor-made for self employed and high net asset clientele in California only.

We have access to new mortgage options such as:

1. 12 months of business or personal bank statements

2. 1 year tax returns (no more 2 year averaging)

3. Substantial assets

4. No income ratio for loans under 50% LTV

In the past, a majority of self employed people would simply seek out a stated loan in order to purchase or refinance property. After the housing and mortgage meltdown, many of these loan programs simply disappeared. Lenders soon became more stringent with their lending guidelines and it became subsequently harder for people who owned their own businesses to qualify for financing. Now that the real estate market is making its way back, a small number of lenders are now expanding their guidelines to become more attractive to certain buyers who have been neglected.

Give us a call at 800-598-9790 or visit http://www.selfemployedmortgageloans.com for more details

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