| A stated income mortgage was primarily designed | | | | be assured that the borrower has got nothing to |
| for those who are in a such rush to draw out a | | | | hide and will readily pay off the loan. Lenders feel |
| loan from any lending institution that they have no | | | | that borrowers who are not willing to show that |
| time to deal with income documentation such as a | | | | they own some assets or what they really do for |
| W2 or their 2-year tax return or for those who | | | | a living, or how much their real income is are |
| are currently going through a promotion and an | | | | high-risk borrowers and should therefore pay a |
| increase in their salary that they can't present a | | | | higher interest rate. |
| new proof of income yet. | | | | Another downside of a stated income mortgage |
| But there are some people who find this type of | | | | especially if it is one of those bad credit |
| loan application handy even if they actually have | | | | re-mortgages is the fact that even if lenders |
| the documentation with them. These people, who | | | | don't require documentation from the borrower's |
| keenly protect their privacy for some reason; | | | | side, they do ask borrowers to execute a Form |
| maybe they have a bigger income than what | | | | 4506. Through the execution of this form, the |
| they stated at IRS or they have a very low | | | | borrowers authorize the lenders to ask for IRS |
| income that they don't really reach the lender's | | | | verification of the end result of the borrower's |
| income requirements, also think they have the | | | | tax return. If this doesn't match with what the |
| right to state an income in the application form | | | | borrower has stated in his income he's bound to |
| even if it's not true. | | | | get himself in trouble for fraud. But of course, |
| The drawback of using such type of loan is the | | | | some lenders don't really require this possible |
| fact that the lesser the documents, the higher | | | | fraud investigation. It is now a matter between |
| the interest rate. This is because lenders feel safe | | | | the borrower's privacy and his conscience. |
| with a fully documented borrower since they can | | | | |