Self Certified Mortgage: WHEN CHARACTER PAYS

2007-03-08 10:33:40

( Financial )



THE ATYPICAL LENDER

Self certified mortgage came about in response to a growing population of entrepreneurs and individuals who are gainfully employed on a free-lance or a work-at-home basis.

Banks and other lending companies have come to terms with the fact that a big portion of their mortgage and loan business will not come from those with stable and consistent employment. A significant portion of society will not fit the typical profile of a borrower, and to deny them financial services and products is to remove a huge chunk of the market.

If you have changed jobs very often or paid on a bonus basis, your credit report may not be very favorable and consequently you may have difficulty getting approved for any type of loan. However, times have indeed changed as banks and other lending companies are now offering self certified mortgage programs to cater to these types of borrowers.

THE VALUE OF YOUR WORD

Self certified mortgage is a loan extended by lenders by virtue of your own credit testimonial. Since your circumstances are different, you will not be required to submit a proof of income from your employee. Self certified mortgage only requires you to self certify - that is to make a formal statement indicating your solvency and your ability to pay the loan should you be approved for it.

Because a self certification mortgage does not require the standard documents necessary to most types of loans, it does have a relatively higher interest rate than ordinary loans. Lenders use the higher self certified mortgage interest rates to cover the greater risk that this type of loan presents to them.

In the final analysis, self certification is all about being able to elicit some level of trust and confidence from your lender. Your character will testify to your ability and intent to pay; and character is not something you can put on or fake if you do not have it in the first place.


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