Self Certified Mortgages: Certifying Yourself

2007-03-08 10:33:40

( Financial )



DIFFERENT INCOME SOURCE

Self certified mortgages are mortgage plans designed for those who have other means of livelihood aside from regular employment. Mortgages for self employed are considered sub prime mortgages because they belong to a special class that does not fit the ideal lender-borrower relationship.

Self certified mortgages came about as banks and lending companies realize that people who are self-employed or those who work at home are not any less capable of paying their debts. If any, most of them earn more than regular employees. The problem is that it is very difficult to prove the veracity of the documents of those who have alternate sources of income. In this light, lenders cannot demand the same financial documentation for self employed mortgages because none can be presented.

Under ordinary mortgages, regular employees can present their proof of income by submitting employee pay slips. These pay slips in turn can be verified by calling the employee to confirm whether or not the statement of income is true. Once verified, it is just a matter of time before the mortgage is approved and released.

HUGE MARKET

There was a time when self employed mortgages were difficult to obtain because of the scarcity of lending companies offering the service. But as the financial industry realizes the huge market for self certified mortgages, more and more lenders are offering them.

For the most part, self certified mortgages are not difficult to apply for because there is less presentation of documents. The problem is that self certified mortgages are more expensive in terms of the down payment and monthly payment dues because self certified mortgages have higher interest rate charges than ordinary mortgages.

As the name implies, self certified mortgages requires you to certify yourself. In this case, it will be your character that will determine if you get that mortgage or not.


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