For borrowers with excellent credit and 25% or more equity in their properties, there may be almost no difference in pricing incurred by selecting stated income documentation for their home loan refinance.

With stated income loans, you do need to be employed (or self-employed) and state enough income to qualify for the loan. If you don't have enough income, there are no ratio loans where you don't need state your income. Then there are no docs loans where you don't even need to be employed.

A stated income loan is for people, generally self-employed, who actually have enough income to qualify them for the loan but may have a hard time documenting it or the income may not conform to traditional lending guidelines. Just because you are stating your income does not mean you should lie of fabricate the amount of money that you make or that comes into your household. If an underwriter feels that the amount of income you have listed on your loan application is not in line with your job, then he/she has the right to request proof of income. Therefore make sure you are being truthful on your loan application and talk with your mortgage professional about which type of loan is best for you.

Applying for a stated loan is a simple way around the problem. A stated loan can allow you to close on your property with minimal paperwork and headaches.

There are some drawbacks however. Be prepared to pay a slightly higher rate and your credit needs to be fair to great depending on how much you plan on borrowing against your property's value.

There are low-documentation programs available for self-employed borrowers with excellent credit that have minimal pricing adjustments. Be sure to consult with your mortgage professional.