Whether you can get approved to refinance a stated income mortgage today depends to some extent on the reason you took out such a loan in the first place. If you needed one because you just didn’t want to deal with complex self-employment forms, or your business didn’t yet have a two-year track record (and now it does), you may be able to qualify for a traditional mortgage.
How Underwriters Look at Mortgage Refinances for Self Employed Borrowers
Look at your tax return (the one you are preparing for 2009). To do a quick and dirty income check, you can use Fannie Mae’s Self-Employed Income Analysis form, which is available online if you want to give your income a test run.
If that doesn’t give you enough income to qualify, you can also use corporate or partnership income to qualify–if you can prove that you’re legally entitled to the income and that you have access to it.
Don’t Count Your Expenses Twice
This happens more often than you’d expect. If you have a payment that shows up on your personal credit report, for example you have a company car lease–an underwriter and most automated systems will count that payment in your debts. However, if you are already deducting it from your business income, treating it that way overstates your expenses. Go through your credit report carefully and note every expense that is used for business and deducted from your income. It makes a big difference.
Consider Your Home Equity Position
Most stated income mortgages taken in the last few years did require significant down payments. If you are lucky enough to have excellent credit and a large equity position, you may be approved for a loan even if your debt-to-income ratios are a bit high. Try a conventional or FHA lender and see–automated underwriting systems can tell you almost instantly if you get an approval or not.
Get A Little Help with Your Mortgage Refinance
Other options include bringing in a co-borrower or co-signor. Additional verifiable income could qualify you for a traditional loan.
Try a Mortgage Broker
Stated income financing is not totally dead. Brokers have financing available–either stated income products or loans that allow you to prove your income with bank statements showing your cash flows. A quick check shows there are stated income 3/1 hybrid ARMs out there at 6.25%, assuming that your credit, assets, and equity is sufficient to qualify.