The 3CALoan Stated Income Mortgage Loan Lending Advantage
What is a Stated Income Loan?
Stated income loan lenders requires the borrower to state their monthly income on a mortgage application. The loan was originally intended for self-employed borrowers with complicated tax schedules. However, leading up to the financial crisis, the popularity of the loan gained momentum. Borrowers found it easier to qualify for the loan by stating their income. Hence, the loans are interchangeable to the the term “liar’s loans.”
Stated income loans differ from full documentation loans, which require the borrower to verify his income by providing bank statements or similar asset documentations. In short, the borrower does not need to show their income tax returns, W-2 (employee income) forms, 4506T, pay stubs, or other such records to the lender. Although in the short term they can help a borrower save time and receive funds faster, it may cost more in the long run.
The different type of Stated Income Loans:
- Stated Income Verified Asset (SIVA) Loans
- A SIVA loan requires the borrower to verbally state his income, assets, and employment. His assets, which must be verified, must be high enough to qualify for a mortgage and satisfy the required debt-to-income ratio.
- Stated Income-Stated Assets (SISA) Loans
- During application time, neither income nor assets are verified for a SISA loan.
The Borrowers Stated Income Loans are good for:
Stated income loan lenders offer borrowers who are flipping a property to sell. Also, stated income loan lenders provide this loan for borrowers looking to purchase another rental property. Borrowers who are flipping a property to sell need a loan to get through the remodeling stages before they sell. On the other hand, borrowers looking to purchase other rental properties do so to better their cash flow. Furthermore, others use the loan temporarily. Some investors would rather use loans to keep portions of their own capital to use for other investments rather than use up all their cash to purchase properties. For example, they may have a big cash advance coming at the end of the year but cannot afford to pass up on certain investment properties.
Requirements of Stated Income Loan Lenders
Stated income loan lenders require the borrower to state their income. This obviously carries increased risk for the lender funding the loan. Therefore, stated income loan lenders have higher requirements when funding this loan compared to a conventional mortgage loan. The borrower must have large amount of reserves, their employment verified, a good credit score, and a large downpayment. Furthermore, the larger the downpayment, the easier it is to get the loan especially because stated income loans are based on the equity position in the property. Large down payments roll into the less likelihood that the borrower will later default especially because the borrower has so much invested. In all, better financial and credit situations leads to a higher chance of approval with favorable rates. To elaborate, they must meet the following requirements:
- High credit score requirement (usually 700 and above)
- Submit their bank statements
- Display a high level of income
- Display large amount in savings
- Maximum 70 loan-to-value ratio
Stated Income Premiums
Stated income loan lenders may require the borrower to pay a premium due to the uncertain nature of the loan. While the aforementioned stays intact, there are alternative new methods to verify an individual’s income.
For instance, under the “bank statement loans” method, a lender may ask a borrower for 12-24 bank statements, business bank statements, and even both. Then, the lender may scrutinize the deposits and average out the statements given to them. They can ask the borrower to provide them with a Profit and Loss Statement, which summarizes the revenues, costs and expenses incurred during a fiscal quarter or year.
The borrower can choose not to disclose their statements or employment but rather showing the lender their assets. This method requires the borrower to have a good amount of liquid assets. The lender, in this case, would use a certain calculation to verify whether the borrower qualifies for the mortgage.
Why you should choose 3CALoan?
Stated Income loans are growing compared to hard money loans. The latter are specialized collateral-backed loans with high interest rates and short terms of around one year. Unlike hard money, when it comes to building a real estate portfolio, stated income loan lenders give borrowers more flexibility. 3CALoan has developed a comprehensive mix of highly customized stated income loans to help maximize a client’s return. All of our stated income loans are offered at competitive rates. Hence, owners and investors can spend less on interest and fees to turn a bigger profit from their investment.
What we offer
There are flexible loan terms and payment schedules available to fit the needs of any owner or investor. So, it does not matter whether the funding is used on the purchase of an existing, the construction, or the renovation of a building structure. Refinancing loans are available to save current owners money on their mortgage loan payments. No matter the size of the loan, 3CALoan offers stated income loans that fit a borrower’s needs. Our multiple loan programs ensure that you get the financing that is best for you and your property. We can provide financing for all of the following:
- Large, multi-million dollar commercial complexes
- Mid-size commercial complexes
- Smaller commercial complexes, such as strip center, retail building etc.
- One to four units, apartments, residential, commercial, mixed use etc.
Our competitive rates, efficient services, and talented team can help ease the process of purchasing a home. We like to make sure our clients are well-informed and educated about every step of their home buying process. Our excellent quality services are reflected on our client’s happiness and confidence upon closing a deal. To find out more information about FHA loans and how we can help, contact us at (818) 322-5626.