If you own your own business, are self employed or get most of your income from commissioned sales, then you have probably run into trouble when applying for credit. Specifically when you are looking for mortgage refinance options you have difficulty being approved because you can’t prove your income by traditional means. Financial institutions are beginning to realize this problem and are coming out with unique solutions called stated income loans and lines of credit.

A stated income home equity line of credit is one where you do not have to provide documentation that supports how much you say you earn. They lender essentially takes your word for it. Upon approval you are able to borrow against the equity that you have built up in your home.

It is a common business objective to strive to keep taxable income as low as possible by deducting eligible expenses. This is at odds with lenders who like to see as big an income as possible. They more income the easier it is for the borrower to service their total debt. Stated income credit products solve this.

In order to be approved for this type of loan you need to have very good credit and a very high credit score. The lender looks for this because they do not request you to bring in pay stubs or W2s. They increase their risk when they don’t verify income, so they look to shore this up in other areas.

Interest rates and fees on stated income loans are often greater than on usual loans. This helps to offset some of the increased risk the lender takes as well. All in all, however they are by no means excessive.

Some financial institutions will also put criteria on how long the applicant needs to have been in business. The may also include other factors such as payment shock, where the new payment can not be more than fifteen percent of your existing shelter payment. Essentially, because they are opening themselves up to additional risk by not verifying income, they endeavor to ensure that you are as strong as possible in all other areas of the approval criteria.

So there are options out there if you are self employed for getting home equity lines of credit. Be sure to contact your local mortgage lender and see if they offer stated income products. If not you can search online for one who does are consult with a mortgage broker. Regardless of your choice, just be aware there are options.