Quote:
Originally Posted by SummerChild
I wonder if there is a way to just use income for the loan qual. Is that a stated loan? Have to look that up.
What do you guys think of 80/20 setups? I'm scared of interest-only loans so that's not an option. Thinking about the 7/1 ARMs too.
Anyone have any experience with any of these?
SC
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A stated loan does not require information from your credit report or verification of income to approve you for the loan. Because of the high risk lenders take when not checking these areas, the interest rate is typically much higher. However, these are good options for people with liquid cash but trouble getting conventional loans because of their credit or self employment.
80/20 loans typically allow you to get a larger amount by breaking the loan amount into two separate ones. This also avoids PMI because you are not borrowing 100% on one loan.
Interest only is an option if you are certain that you are either moving before fairly soon or that the house will increase in value pretty steadily and rapidly by the time you plan to sell. Otherwise, you will be in a situation where you have not paid anything on the principle amount when you sell. Therefore, it may be difficult to come out on top when you list and deal with lower offers in a buyers market like we have right now. However, it has been successful for people who are able to get a property well under appraisal and market value. They can then sell and not have to worry about the unreduced principle amount.
I hope I've helped. I'm in the process of buying my 2nd home and selling my 1st. So, I'm right in the midst of all this right now.