The Unknown Value Of Using Stated Income Loans – Personal Protection

Posted on October 31, 2008
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The use of “Stated Income” is typically associated with residential lending. However, there are commercial applications that also use this type of financing. Stated Income is NOT intended to be created income (that is in part what has gotten the residential community into trouble). Stated income should be customary to the type of industry and position of the individual in that company.
Most banks will perform a thorough income verification process. Many non-traditional lenders (this includes Wall Street conduit lenders, private money lenders and some “out of the box thinking” banks) rely on the property to produce income and will place more weight on this aspect of underwriting.

Banks will also use your income as a basis for requiring covenants and restrictions in their loan documents. This means that they can call a loan due anytime they believe your income is not high enough—even though you are making your payments on time. (Auditors also review your tax returns after the loan closes to grade the banks.)

Stated income loans are becoming increasingly popular for commercial lending because they are a vital method for you to protect your overall financial interests, before and after the loan closes. (Note: stated income loans usually do not exceed 1.5 million, but there are exceptions to everything)

This is another form of asset protection and should be a part of your borrowing arsenal. Know your options and align yourself with professional that have your best interest in mind. Stated income is not designed to hide your income, but to protect your finances.

Donna L. Loader is a seasoned veteran in the financing field. Having over 20 years in residential and commercial financing, consulting and mentoring, she is still offering unparalleled service to her clients. http://www.financethepropertynow.com or blog at http://www.financeitnow.blogspot.com

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