Loan qualification is an important step in the process of identifying qualifying properties for a 1031 exchange. Here, we will answer three questions related to loan qualification:
- How do lenders set qualification criteria?
- What happens during the pre-approval process?
- How do I qualify for a loan?
How Do Lenders Set Approval Criteria?
Most lenders set approvement criteria based on the loan products they are licensed to offer and the clientele they typically serve. Choose your loan officer based on their product offerings and typical funding strategy. If the loan product your are considering doesn’t have a history of being used in a 1031 Exchange, you should consider using a financing mechanism that is built for the 1031 Exchange, such as Plenti’s mortgage option. Schedule a consultation with one of our loan experts to learn more about your options.
What Happens During the Pre-Approval Process?
While pre-qualification is an informal process in which information and a financing estimate are given in good faith, the pre-approval process is one in which proof of financial claims are registered with the loan officer, such as copies of pay stubs, profit and loss statements, bank statements, W-2s, tax returns and, of course, a credit check.
Learn more about Loan Pre-Approval.
How do I Get Approved for a Loan?
In order to get approved for a loan – specifically, a real estate investment loan – ensure that you have assembled all necessary documentation. Use these documentation resources as checklists to ensure that you have gathered all necessary documents for the loan approval process:
Conclusion
When seeking loan approval, it is important to understand the process so that you can leverage your loan opportunities to acquire profitable properties that offsets the cost of borrowing by multiple points. When you know how to leverage the approval and pre-approval process to maximize the profitability of your 1031 Exchange, the opportunities for investment and portfolio growth become self-evident.
To better understand how an exchange-optimized loan might fit into your current investment strategy, schedule a consultation with one of our qualified mortgage experts. Have more questions? Contact us here.
