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Getting a Mortgage When Self-Employed
By Kirk Haverkamp, Published: November 09, 2009
Getting or refinancing a mortgage when you’re self-employed can be a real challenge these days. With the virtual disappearance of stated income loans, it’s become much more difficult for anyone who doesn’t get a regular paycheck to qualify for a home loan. But it still can be done.
Stated income/stated asset loans, also known as Alt-A mortgages, used to be one of the most common ways for the self-employed to obtain a mortgage. You simply told the bank what your income was and the bank took your word for it. When housing values were rising, it really wasn’t that big of a risk for the lender.
But Alt-A mortgages got a bad reputation as “liar loans” during the housing bubble, when they were abused to exaggerate incomes for borrowers who otherwise would never qualify for a loan. When the housing market and economy went sour, stated income/asset loans accounted for some of the highest rates of defaults and foreclosures, and most banks simply stopped offering them. Read the rest of this entry »
