Borrower Worries About Mortgage
August 13, 2008, 6:58 pm
Self-Employed Borrower Worries About Mortgage
I am wondering how the problems in the mortgage industry will impact the self-employed. I am self-employed and I was preapproved for a mortgage last year but decided to wait until I had 20 percent for the down payment. I would be getting a stated income mortgage. In other words, I would not have to provide proof of my income. I have a credit score of over 800, but I’m concerned that I may be denied a mortgage because of all the problems lenders are having.
Mortgages have become more difficult for the self-employed to obtain, especially if a borrower is applying for a “stated income” loan,” said Tim Malburg, president of Capstone Mortgage in Wilton, Conn.
Mr. Malburg said that in most cases, a person applies for a “stated income” mortgage because he or she cannot provide two years’ of tax returns — perhaps because the 2007 return has not yet been filed — or because his or her tax returns do not show sufficient income to qualify for the loan.
This kind of loan is riskier than an “income verification ” loan in which claimed income is verified by tax returns. “In the past, some lenders were willing to overlook this additional risk because of rising real estate prices,” Mr. Malburg said. “But those days are gone.”
