“Full Documentation” and a “Stated Income and Assets” Mortgage Loan

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What Are the Differences Between a “Full Documentation” and a “Stated Income and Assets” Mortgage Loan?

“Full Documentation” and a “Stated Income and Assets” Mortgage Loan

While most mortgage loans are of the full documentation variety, there are a number of products that are called a variety of different names, all of which fall into a category known as “limited doc” or “alternate doc” loans. Full documentation loans require that you submit verification for all income, cash, etc., as normally called for in most mortgage loans.

Stated income and assets is the most “liberal” of all the limited doc mortgage types. You merely “state” your regular monthly gross income and your available cash to complete the purchase or refinance of the property. You are not required to supply third party verification of the income level and available cash you state on your application. The lender agrees to accept your statement of your gross monthly income and liquid assets. However, this is not a giveaway program. If you are NOT self-employed or a commissioned employee, but are a salaried or hourly worker, you may not be allowed to use this product. Should you have poor credit and no excellent explanation for your status, you may also be ineligible for this type of mortgage.

In between these two ends of the documentation spectrum, are limited documentation programs, which may allow you to state your income but verify your assets by supplying one or two years' bank statements. Or, you might be required to prove your income but be allowed to just state your liquid assets, which allows you to borrow down payment or closing cost money without proving where you received the funds.

Stated income and asset programs are excellent choices to eliminate excess paperwork and can speed the process of approval and closing, however you will pay between one-quarter and three-quarters of a per cent more of interest for this privilege. If your credit score is below around 620, you will have fewer of these loan options open to you and you will probably have to pay one per cent or more above the full doc interest rate. But always examine all of your available options to locate the best choice for you.

   

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