Getting a mortgage is a lengthy and complicated process. Most traditional mortgage loans require extensive documents to verify your overall financial health. However, you can also get a mortgage loan without these documents. Whether you are looking to ensure privacy or if your income is difficult to prove, a no-doc mortgage can be a great option.
A no-doc mortgage loan or no-income verification mortgage refers to a mortgage loan that does not require the standard list of income documents. Income documents required for a traditional mortgage loan include pay stubs, W-2 forms, and tax returns.
Instead of requiring these documents, a no-doc mortgage loan will accept bank statements as proof of income and/or financial health. No-doc loans were created to allow seasonal workers, self-employed individuals, and independent contractors to be able to obtain a mortgage loan.
No-doc mortgage loans have evolved considerably since their origin. Before the housing crisis of 2008, no-doc mortgage loans were a popular option because mortgage lenders did not need to verify the borrower's ability to pay back the mortgage loan. However, this led many individuals to have loans they were unable to repay.
Today, federal laws require all mortgage lenders to verify borrowers' income and/or assets to ensure they are qualified to repay. A no-doc mortgage is still a viable option for people who have a complicated income situation.
No-doc mortgages function similarly to conventional loans. The main difference between how conventional mortgages work compared to no-doc mortgages is the documentation required to obtain the loan.
In general, no-doc loans require higher credit scores, larger down payments, and have higher interest rates. However, they still have the same benefit that traditional mortgage loans have: they allow people to borrow the funds necessary to purchase the property.
Government regulations have made no-doc loans more difficult to obtain compared to conventional loans. This does not mean that a no-doc mortgage is impossible to get. Instead, these government regulations ensure that mortgage loans are not going to anyone who is not qualified to buy real estate.
Several types of mortgages and mortgage loans fall under the no-doc and low-doc mortgage loan umbrella. Here are the five main types of no-doc and low-doc mortgage loans:
No-doc loans and no-income verification mortgages are worth considering if you'd have trouble qualifying for a traditional mortgage. If you have sufficient funds to purchase property but standard income documents do not reflect your ability to repay, a no-doc mortgage is an option. There are several scenarios when a no-doc mortgage is a good idea, which includes if you are:
These are some of the most common scenarios for obtaining a no-doc mortgage or no-income verification mortgage. If you have any of the conditions listed above, no-doc loans could be a good choice for you.
Additionally, there are some unique scenarios that require a no-income verification mortgage. For example, if you won the lottery or if your business recently deducted sizable expenses, a no-doc mortgage is a much better option compared to a traditional mortgage loan.
About Us – Rely Services
Rely Services is a business process outsourcing (BPO) company that specializes in Mortgage BPO and Mortgage Loan Processing Services. As a leading provider of Mortgage Processing Services, Rely Services goes above and beyond for our clients. To learn more about all of our outsourcing and processing services, Contact Us Here!