Stated Income Home Loans

March 29, 2005 10:31 AM

My wife and I are applying for a home loan. I recently started my own business while she has a normal job. Should we choose a "Stated Income" or a "No Income Verification" loan? Our loan broker suggests using a Stated Income loan by adding our two real incomes together and saying it is her wages. This seems like lying to us....what do you think? A No Income Verification loan is $10,000 more....
posted by Instrumental to Home & Garden (6 answers total)

Your broker sounds terrible.

Brokers don't make loans--banks do. Brokers are middle-men that, at best, locate slightly more advantageous rates by monitoring the market, and, at worst, just add a layer of expense and paperwork between you and the bank making the loan. In my opinion, the slight interest discount a broker might obtain is outweighed by the risk of shady practices brokers present, such as undisclosed kickbacks from banks. This broker may be trying to steer you toward a certain loan because he will get a better commission. I would consider calling up/dropping by a couple of banks just to see what they offer you without the "assistance" of the broker. Washington Mutual is known as particularly friendly to deal with. I would also try Countrywide, which is sort of like the Walmart of mortgages.
posted by Mid at 11:46 AM on March 29, 2005

I strongly suggest talking to another loan broker, or just directly to a bank, as suggested above. Among other things, those making the actual loan are going to ask for documentation of income, like income tax returns and W-2s. And on the application, you need to list the employer name and job title, and if the income for your wife is much more than one would expect for that job title, it will stand out. In short, you may well not get away with lying about your wife's income in any case - your broker is not only unethical, but quite possibly stupid as well.
posted by WestCoaster at 12:26 PM on March 29, 2005

Get another broker. You don't want one that encourages you to make misrepresentations.

There are many mortgage brokers (around here anyway) who specialize in working with the self-employed.

I would use a broker, though. I once knew someone who worked for a major bank. His employee discount was that he could get a mortgage for 1 percentage point below the bank's best rate offered to the general public at the branch. When he went to the branch, they told him to go to a mortgage broker because he the rate he'd get (from that bank) through a broker would be even better than the employee discount -- presumably they didn't give this advice to regular customers :-)
posted by winston at 12:35 PM on March 29, 2005

I am self employed and did a "no doc" loan. If you have good credit, it should be fine. I shopped a few banks and found the best deal. It helps if you have a chunk of cash in the bank.
posted by gingembre at 3:02 PM on March 29, 2005

Yes, Yes, and Yes--A home is to important a purchase to shade the truth (lie)--A broker who encourages you to give false information is working for some one other than you--do you really want to run the risk of having your loan called and/or moved into a penalty/high risk rating because of a false application--remember you sign the financial application not the broker--Good luck and shop around Frank
posted by rmhsinc at 5:00 PM on March 29, 2005

I just went through something similar. My wife is a "permanent" employee, and I'm an independent contractor. the mortgage bank kept asking for more documentation. (They seem to do that anyway on mortgage loans, but this was more than I'd seen before.) They finally settled for our tax returns and a letter from our tax accountant stating that I did work from the address and phone number I supplied.

Lose that broker; he's not doing you a favor. If the bank gets suspicious that you're shading the truth, they won't give you the loan at all.
posted by Kirth Gerson at 6:04 PM on March 29, 2005