Why CRE Investors Are Using Stated Income Loans
As an investor, you have to make sure that you are always on top of the best ways to spend your time and money. With commercial real estate investments, for example, you might want to consider alternatives to traditional forms of financing. Stated income loans are an interesting area to explore. While there are some similarities between these loans and more traditional financing methods, there are several key differences that can be beneficial.
There are a few different types of loans in this category. One, a stated income verified asset loan, gives you the opportunity to state your gross monthly income when you are applying for the loan itself. To verify the numbers that you are putting down, you are required to show bank statements or some equally legitimate proof of income. The other major type, a stated income stated asset loan, allows you a little more freedom. With this loan, all you have to do is state what your income is and what your assets are. There is no need to have them verified by your lender.
With both types of stated income loans, there are a few key points to keep in mind. No matter which loan you are considering, you will have to verify your employment. Traditionally, your lender will contact your current employer to verify your status with the company. If you are self-employed, you will be asked for documentation from a CPA to verify your numbers. In some cases, a lender might ask for your previous tax documents. This is a way of verifying that you have worked consistently and that your income has not fluctuated in any glaring ways.
Since there is a degree of uncertainty involved in stated income loans on the part of the lender, the terms of the financing reflect this fact. You can expect slightly higher interest rates, especially when compared to traditional forms of borrowing. Getting approved for this loan will help you to have fast access to cash, which is important if you are investing in commercial real estate. If you believe that you can handle the high interest rates, and know that the property you are buying is worth the risk, then you will be putting yourself in a good position.
When it comes to making an investment in property, especially commercial real estate, you want to make sure that you consider all possible approaches. Examine alternative lending and see if you might be able to get a better deal out of the situation. If you can, you will be ready to make a wise and healthy investment that is sure to yield you some positive results.