In today’s Q& A we will be talking about income as part of the pre-qualification process in getting a mortgage. Your income will show the lender how the loan will be repaid. There are five (5) types of income: Full Doc Verified, Bank Statements, Stated Income, No Doc – also know as No Ration, and Other Income.

Income 1: Full Doc – Full Doc income in when the income can be verified. Verification can be done in the form of W-2’s and pay-stubs. For self employed borrowers, tax returns, and any other proof of being in business for the last two years. Full Doc borrowers stand a better chance of being approved and getting a lower interest rate.

Income 2: Bank Statements – Depending on the situations (lender and credit score) some lenders will allow self employed borrowers the option of providing 12 to 24 months of bank statements to prove cash flow. But, most major lenders and conventional loans will not allow this for proof of income.

Income 3: Stated – Stated income is when a borrower makes the money, but has no way of documenting it. The borrower has to state on the application how much money he makes and has to provide proof (i.e. CPA letter, Business License, etc.). This type of proof of income has been greatly impacted over the last few months by all of the mortgage fraud.

Income 4: No Doc – This is the riskiest loan. The borrower does not have to prove anything. In this situation, credit scores must be high and a substantial down payment is required.

Income 5: Other – This is where child support, rental income, social security, bonuses, etc. can be used as proof of income. However, you have to be able to document each for at least two years.

Every mortgage company is not alike. Ask your personal Realtor whom he or she may recommend! Experience Realtors always have a tight network of professional they know and trust.

 If you or anyone you may know is looking to buy, sell, or invest in real estate in the Lake Conroe, Conroe, Montgomery, Willis, Magnolia, and/or The Woodlands we can assist you!