- A stated income loan is a type of loan in which you simply tell the mortgage lender how much you make for loan qualification. With traditional loans, you have to document your income with the lender, but this is not required with this type of loan. Even though stated income loans are more difficult to find than they previously were, there are some lenders out there that are willing to offer these loans to the self-employed.
- When working as a self-employed person, you may be advised to take several tax deductions so that you can show less income on your tax return. By doing this, you can significantly lower your tax liability for the year. At the same time, it can also work against you because lenders will use this information to approve you for your mortgage. If you know that you will be applying for a mortgage in the near future, it may be to your advantage to not take as many deductions so that your income looks higher.
- If you are self-employed and trying to get a mortgage, you need to make sure that the other factors that a lender looks at are in good shape. For example, you need to have a high credit score and a low amount of debt to qualify. Spend some time paying down credit card balances or store account balances so that you can have an attractive debt-to-income ratio when you apply for your refinance.
- When you are self-employed, you may need to consider working with your existing lender to refinance your loan. If you have already been approved for a mortgage with your existing lender, that lender knows that you have the ability to make your mortgage payment on time every month. As long as you have a good record with your lender, you may be able to refinance your existing loan with them. If you have a loan with the Federal Housing Administration, you can refinance your loan through the streamline refinance program without any income documentation or credit checks.
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