Today, lenders need to document everything about your home loan, including where your cash came from. So if you have your money stashed away under your mattress rather than in a Charles Schwab account, you might find it hard to get a loan. Sure, you might get the approval based on your credit, income, and debt ratio, but when it comes to sourcing the funds that will be used for the down payment, there is nothing to provide the lender with, which makes him suspicious and causes him to decline your loan. With stated asset loans, you do not have to disclose where your assets come from or how long they have been there, which opens up more doors for loan programs for you.
Higher Interest Rates
Of course, because this loan program is riskier than other loan programs where everything is verified, you will pay higher interest rates as a result. If you are not able to get your money into a bank at least 60 days before you apply for a loan, however, it could be your only choice. Some people just don’t trust banks, while others keep their money under their mattress because they want to and don’t mind paying the higher price for the loan. As long as there is nothing illegal suspected about the money you are bringing to the table, stated asset loans could be a good option for you.
Get your Affairs in Order
If you do need to state your assets rather than verify them, you will need other compensating factors to make up for the risk you are providing the lender. Typically, anyone with a credit score lower than 700 will not be considered for this program, but every lender is different, so it pays to shop around if you do have lower credit scores. In addition, lenders need to be able to document your income in order to ensure that you can afford the loan. Most lenders will not allow stated income and stated asset; instead they allow for one or the other. If your money is in your mattress, yet you have W-2s and paystubs that can verify your income, you should go for the stated asset loans and let the lender verify your income. If you have a high debt ratio, it might be worth eliminating some of your debt before you apply so that you can ensure a low debt ratio, aka a compensating factor for the loan.
More Lenders are Offering Them
Don’t get discouraged if one lender turns you down for a stated asset loan – there are many other lenders out there that offer the program. Your parameters might meet the needs of one such program, but you won’t know unless you shop around. It is best to stick with the smaller lenders that you know keep the loans they fund on their books as these loans which do not meet the Qualified Mortgage guidelines are not able to be sold on the secondary market. This means that you have to find a lender that has room in their portfolio for a stated asset loan as most lenders will only take a certain amount of them at one time.
If you have a reason to keep your money in a mattress, then you will have to shop for these stated asset lenders. Take the time to make sure everything else is in order before you apply, though. This includes having at least two years’ worth of income in the same industry; a good credit score; and a clear housing history. The lender needs to see that you are a very low risk aside from the fact that you cannot verify your assets. As long as your job is legitimate and the assets you state are within the realm of what you could make at your current position, you should be able to find a program that gives you the opportunity to avoid verifying the source of your assets.