May 27, 2009
No Doc Mortgage - Is One Right for You?
A no doc mortgage is a loan that does not require you to show verification of your income. This type of mortgage works best for those who are self employed, get a portion of their income from tips, or who receive commission as payment for their work. There are three main types of no doc loans, read over the definitions below to determine whether a no doc loan may work for you.
If you are having a hard time qualifying for a home loan because you are not able to properly document your income, then a no ratio loan may be best in your situation. A no ratio loan is a type of no doc mortgage that allows you to forego disclosing your income information, and eliminated the need for a debt to income ratio to be calculated. Since a debt to income ratio plays a huge role in a loan getting approved, you greatly increase your chances of getting financed with a no ratio loan. This is a good option if you have a high credit score or many assets, as these are the factors that the bank will rely on when making their decision.
No Income No Assets or NINA
NINA loans are a type of no doc mortgage that is only available to those with extremely high credit scores. This unique type of loan does not require you to divulge any information about your income or assets. No exchange of earnings information or bank account information will ever exchange between you and the lender if you choose this type of home loan. However, because the bank has no information about your earnings or assets, they will rely solely upon your credit information when making their decision.
Stated Income Loan
A stated income loan also known as a low doc loan is not quite a no doc loan, but could still help you get financed with little verification of income. With this type of mortgage program, you are only required to make a statement as to what your income is. You do not have to show proof of income, but you do have to make a statement of how much you make on a monthly basis, and how much your income normally varies.
The benefits that a no doc mortgage offers are obvious. For those individuals who have trouble verifying their income or assets with a lender, the various types of no doc loans make it easier for you to get financed. However, there are negatives as well. For one, the no doc loans require you to have a high credit score, making them useless of those with less than perfect credit who still have trouble verifying income. A no doc mortgage will usually carry a higher interest rate as well, and not all lenders will extend these types of loans.
If you educate yourself about the various types of loans that are available, you may find that you have more options than you thought you had. A no doc mortgage helps those who work for themselves, work for tips, or work for commission get financed without the hassle of trying to verify their income. If you need a flexible financing option, then ask your lender if a no doc mortgage is available to you.
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