Mortgage Lending Getting a Little Easier

We are starting to see mortgage bank-statement programs again and also a stated-income mortgage loan program is now available. Both of these programs are for the self-employed borrower only. The mortgage rates on these types of programs come with slightly higher mortgage rates, but that beats having to pay cash as a self-employed borrower seeking mortgage financing.

Here is a report from the Federal Reserve on mortgage lending:

The Senior Loan Officer survey was released this week. The Federal Reserve surveyed 75 domestic banks, 23 U.S. branches and agencies of foreign banks. The survey showed that banks have eased lending standards for many loans, including prime residential mortgages. Only a few of the major banks have eased standards, increased credit limits, and reduced the minimum credit score needed for credit card loans. The loan officers also reported that the new Ability to Repay and Qualified Mortgage standards have had little effect on the approval rate of prime conforming mortgages; however, both standards have reduced the approval rates for prime jumbo mortgages and nontraditional mortgages.

There are some big differences when obtaining these non-traditional mortgage loans. First the program as mentioned above is only available to self-employed borrowers.

The loan to value is limited to a maximum for a mortgage that is using bank statements or stated-income with verified assets and not verifying the income via United States Tax Returns.

Most require a good credit score and on-time payments to current creditors. In addition, assets are key to mortgage approval for these types of loans. The lender has to satisfy your ability to repay the mortgage loan and sufficient assets will help in the mortgage approval process.

You must be self-employed for a minimum of two years. You will need a letter from your CPA to verify the length of time of self-employment and/or a business license.

Most of the lenders are offering 5-1 and 7-1 ARMS though one lender for an add to your mortgage rate will do it on a 30 Year Fixed Rate Mortgage.

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