Called the "Liar's Loan" by some in the industry.... Stating your income is a convenient way to get the benefit of all the income you actually earn, even if it is hard to document. And, contrary to popular belief.... this should also be the figure you give to the IRS.
Speaking of the good old IRS.... it seems that they will soon make it easier for the lenders to obtain tax transcripts for income verification. And in my opinion, this will reduce th numbers of Liars.
So what does this mean? Well, it means that I need to introduce you to the 'No Ratio" loan. This loan does not calculate debt ratios nor verify income. It verifies the employment and disregards debt load. This is where most stated income loans should be anyway....
Carrying about 1/8th% higher first lien interest rate, it is a solid choice for folks who cannot explain away co-mingled business debt on their credit report, or maybe someone who has a spouse re-entering the workforce and has no current income.
Yes Sam,
It is pretty scary that this is out there.....
But people have been lieing there way into homes too big for many years anyway.
I actually do more no ratio loans than stated. I scare my borrowers with the facts. And the facts are... it is mortgage fraud to state your income higher than it really is to lower your debt ratio