The Benefits of Stated Income Loans
When you’re looking for business financing, traditional loans may not be the best offer, especially if you want to purchase property or do renovations. Fortunately, many third-party lenders have an alternative to mortgages: stated income loans.
This type of financing uses the property in question as collateral. To be eligible, the property must cover the amount borrowed as well as any taxes or insurance. As a result, this kind of loan is ideal for valuable property.
It’s important to note that the interest rate is typically higher than with a traditional mortgage because the loan is deemed a higher risk. However, the benefits greatly outweigh the downsides. In fact, here are three major benefits of a stated income loan.
1. Make Your Own Decisions
With a mortgage, there are very specific ways you can use the funds. When you choose a stated income loan, however, you get to decide where the money goes. That means you can use funds both for the purchase and renovation of the property. You can also use the money to fix and flip, quickly selling the home or building to make a profit. As long as you meet the eligibility requirements, lenders don’t really care how you use your funds.
2. Get Approved Quickly
One of the best things about this type of loan is how quickly it’s processed. When you apply for a traditional mortgage, you may not hear back for over a month. That just isn’t going to cut it if you’re in the middle of a business transaction. You need a fast answer so you can move forward with deals. If you have to wait, you may miss out on a great business opportunity.
Fortunately, this type of financing only takes a few days to process. That means you can get cash in a week or less, putting you in a strong bargaining position.
3. Get Approved Without the Red Tape
How are loan approvals processed so quickly? It’s because lenders are more interested in the property’s value than your credit history. That cuts down on paperwork, which means the lender doesn’t have to spend hours verifying a large stack of information. Instead, they determine whether the property can cover the amount you’re looking to borrow (plus insurance and taxes) and make a decision from there.
This is great news for people who are self-employed, have a small business, are just starting their careers in property investment, have poor credit history, or otherwise would have trouble getting a traditional mortgage. Now you have the opportunity to make profits and investments.