Stated Income Loans
While both stated income loans and no doc loans require the least amount of paperwork, there are a few differences between them. These types of loans are sometimes referred to as no credit check loans due to the least amount of documentation required, which basically doesn’t allow for a thorough check to be made.
As you can probably understand by now, especially if you have been following this site for some times, the difference between a stated income loan and a no doc loan is that while you need to provide proof in regards to your income on the first, you don’t need to do that for the second. Then again, both of those loans do not fall under the category of traditional loans due to the fact that they are not bank loans. In other words, no bank would even accept an application for stated income loans, and your banker may have never even heard of no doc loans. This is simply not the way traditional financing works. Now, since we have established that, let’s proceed.
Let’s assume that you need to get a 40 year mortgage to buy a home. If you go to any bank, they will request proof of income and they will run a credit check to see if you qualify. That’s, of course, for a traditional mortgage. The reason someone would decide to look for stated income mortgage loans or no doc loans is that if you have your own business or any other source of income, other than a paycheck every month, then you would simply not qualify for a traditional mortgage. For that very reason, we started hearing terms such as no doc mortgage loans and stated income home loans. But even those two differ.
In order to get approved for any no doc mortgage loans, or any no doc loans for that matter, you would be asked to provide a very limited amount of information. That can be both good and bad, and you will always have to research your no doc loan before making a decision. With stated income mortgage loans, you would be asked to show proof in regards to your income, most of the times through your tax returns. So, yes, with stated income loans you have to provide more paperwork, but the good thing about it is that with stated income home loans you will most likely get better rates than you would with a no doc mortgage.
Another thing that some people do, is that they try to get some no doc personal loans in order to gather enough money to apply for stated income loans. You see, since the rates for stated income mortgage loans are lower than no doc home loans, you would be better off paying the higher interest rates for small no doc loans, and manage to put a down payment for your stated income mortgage loans.
Depending on your financial situation, and assuming that you cannot get approved for a regular mortgage or loan, then no doc loans and stated income loans may prove to be viable solutions for your financing.
