Why Using Stated Income Loans for Real Estate Investments Just Makes Sense
Stated Income Loans are Speedy
Since the housing market has been making a comeback, so have several types of loans which had practically gone extinct throughout the recession and the crash of the market. One of the returning loans which have attracted the most notice from borrowers are stated income loans. These loans allow borrowers to take out a loan with minimal financial checks, resulting in a speedier process. While this offers certain risks for the lenders, it can offer great things to those who need money for a home on short notice.
You Should Know that Stated Income Loans Have Varied Names
The first thing that those looking for stated income loans for real estate purposes should note is that this particular loan has many different names, and many of them may vary in meaning a good deal. Therefore, it is best to discuss in-depth details about the loan with a professional and representative of the lending institution of choice in order to avoid misunderstandings about the financial realities of the loan. These loans may also be called “non-conforming loans,” “non-QM loans,” “no ratio loans,” “alternative documentation loans” and several other titles depending on the lender in question.
Stated Income Loans Give Self-Employed Borrowers More Financing Options
When it comes to taking out a loan for a real estate investment, traditional loans might be the best way for many people. However, this can be problematic for self-employed borrowers or others who lack proof of pay-stubs or W-2’s showing their regular income. In this case, stated income loans might be a great bet. Lenders, however, will check certain things to ensure that a borrower is fiscally responsible, and oftentimes only accept borrowers with an exceptional credit score. Current and proper tax information will also be required as is the case with almost any lender for any loan in order to ensure that the borrower in question is not claiming any income that has not been reported. These precautions are less stringent than those exercised during the application for a traditional loan, but manage to reduce the risks for the lenders as well as expedite the process for the borrower.
Stated Income Loans Are Way Less Stressful Than Traditional Loans
Taking out a loan for purchasing a home or other real estate can be stressful. Stated income loans can help to reduce some of the issues associated with the process, but introduce some problems of their own such as the expectation of a hefty down-payment and possibly higher than average rates involving repayment. Therefore, when considering what kind of loan is needed for the purchase of a house, one must think about what they truly need in their loan – quickness or efficiency?