No Verification/No Documentation Loans
If you wish to make sure your home purchase is kept private, you might want to consider obtaining a no verification or no documentation loan. These types of loans help you to keep your financial information to yourself without having to share it all with your lending institution.
Since this type of mortgage loan allows you to bypass some of the paperwork that is typically associated with home loans, these loans typically result in higher interest rates and fees. Therefore, it is important to determine whether or not the privacy is worth the extra cost.
Who Obtains No Verification Loans?
Some people claim that people who obtain no documentation loans must be "shady" or have something to hide. This isn't necessarily the case, however, as many people choose to get this type of loan for very legitimate and honest reasons.
Some of the reasons you may choose to get this type of a loan include:
- You are self-employed
- You receive payments each month from clients with poor credit or with a low income
- You do not claim all of your bonuses or tips
- You are divorced and your ex-spouse has a poor credit history
- You are an immigrant that receives "under the table" payments
- You are unemployed and do not meet the income requirements for a traditional loan
- Your debt to income ratio is poor
While it is true that criminals who make a living dealing in illegal activity may also take advantage of this type of a loan, that is not the intent of this loan option. In fact, approximately 20% of people currently carrying a mortgage choose to go this route.
Getting the Proper Paperwork
Despite its name, there are still some pieces of paperwork you will generally need to supply with this type of loan. For example, the lender may still require a credit report in order to determine how good your credit is. In addition, the lender will want to get an appraisal of the home in order to make certain the amount of the loan is worth the value of the home. It is possible to obtain one of these loans without this paperwork as well, but it is generally much more expensive. It should also be noted that these types of loans are only valid with single family homes, condos, or townhouses. Therefore, you cannot purchase a commercial property, a mobile home, or a manufactured home with one of these loans.
Types of No Verification Loans
There are three basic types of no verification loans you can select from. These include:
- No-Doc/No Income-No Asset Verification Mortgages
- No Ratio
- Stated Income
A No-Doc/No Income-No Asset Verification Mortgage, otherwise referred to as a NINA, is completely private. In fact, all you really need is the address of the home you wish to purchase and your social security number. In order to qualify for one of these loans, which can be fairly expensive, you need to have a very high credit score.
No Ratio Mortgages are most commonly obtained by people that are going through a rough divorce or by those that are going through a career change because they do not require income verification. These mortgages also do not require revealing the amount of debt you are in. Since you don't need to provide as much paperwork, you can move through the entire process much faster and get into your home sooner.
The Stated Income Mortgage option is generally utilized by people that are self-employed because they do not have to prove their income. Rather, they simply say how much they make and then demonstrate that by providing a profit and loss worksheet. Although this does require showing some paperwork, it makes it possible to claim a different income than what is shown on tax forms. If you are interested in obtaining a mortgage loan without having to show proof of income or debt, contact FiveStarHomeMortgage today. We will help you find the loan that is right for you!