4 Tips About No Documentation Mortgage Loans - part 1
by Ben Afzal
Lenders traditionally required a borrower to document income. This came in the form of the last month's pay stubs, copies of the past 2 years tax returns, 1099s, or other income documents. This documentation allowed a lender to verify the income that you are claiming on the loan application.
To a lender your income is one of the most basic predictors of whether you should get a loan or not. If your income is $10,000 per month and your mortgage payment is only $750 then you seem like a relatively safe bet for someone to lend to. If your monthly income is $5,000 and your proposed mortgage payment will be $3,000 then you may not be such a safe bet.
Lenders with "No Doc" loans can allow you to apply without documenting your income.
No Asset Documentation
Lenders often want to see that you are good with your money. One way to measure that is to see how much you have saved up.
Lenders often require documentation on your assets. This can come in the form of the past several month's bank statements, retirement fund statements, investment fund statements, or other documentation showing your liquid assets.
Often times lenders want to see at least several months of "reserves" which is an industry term meaning having the money currently on hand to pay a specified number of months mortgage payments.
In counting towards your assets the lender will count money in your bank as a liquid asset, but calculate your retirements as having less liquidity. Some lenders will weigh the retirement funds at only 75% of their value because or restrictions on the use of that cash, its taxability upon withdrawal, etc.
Many lenders have loans that do not require asset documentation of any kind.
No Employment Verification
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4 Tips About No Documentation Mortgage Loans
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