When people want to apply for a mortgage, the bank needs to determine what rates you qualify for. Unfortunately, there is a group of people who have difficulty getting the type of mortgage they want. This group includes individuals who make a large portion of their income through self-employment or investments. There is a viable workaround for this problem by means of stated income financing.
The reason why self-employed individuals have problems qualifying for a mortgage is the fact that the amount of money stated on this tax returns is often substantially lower than what they actually make. This is beneficial to an extent. Self-employed workers are able to lower the amount of income on tax returns, which is beneficial in terms of how much they have to pay in taxes every year. However, banks and other lenders who can provide you with a mortgage may look at your tax returns and believe you do not make enough money to qualify for a loan for a certain house.
The advantage of obtaining a mortgage through stated income financing is the fact that you can get a loan through means outside of tax returns. You can use additional documents to show how much money you actually earn. For example, one type of document that a lot of people bring up is bank statements. This definitively shows how much money you actually have, and all the details of the statement can show how much you earn month-to-month.
In the event a bank statement does not work for you, there are certain lenders who will accept other documents. Most of the time, you will need to show proof of your employment. That means you must show some kind of documentation that you have a job and that you are self-employed. If you have a CPA, then you can provide a document from him or her stating that they work with you and that you have a job. Above all else, you should have a good credit score before going in to obtain this kind of financing. Good credit will always make the process so much simpler.
If you initially thought that you could never get a mortgage due to your type of employment, then you no longer have to fret. Stated income financing is here for you, and many people have benefitted from this method already. Find a lender near you that can provide you with this financing so that you can purchase the property of your dreams.