Considered one of the more risky ways to purchase a home, a no-verification or no documentation loan is given to those who do not want to provide their tax or pay check information to gain a typical mortgage. People who perform in seasonal business, own their own businesses, are paid under the table or receive paychecks now and then will go for no verification/no documentation loans. These loans allow a level of secrecy while still allowing a person to purchase their dream home.
Recent surveys show who is applying for no verification loans:
- Those who receive monthly payments from clients with poor credit ratings or low income.
- Those who do not claim all of their tips or bonuses on federal taxes.
- Self-employed people.
- Divorced couples where one spouse has a poor credit history or bankruptcy on record.
- Immigrants who are paid under the table.
- Criminals who make their living through drug sales or theft.
- Unemployed workers who do not meet income level requirements for traditional mortgages.
- People with poor debt to income ratios.
Close to 20 percent of all mortgages are no doc or no verification loans. You can keep your financial information private while still being able to purchase the home of your dreams.
With any no verification or no documentation loan, you still may have to submit to a credit report check and an appraisal for certain programs. Though banks will not require tons of paperwork and years of tax forms, they still need to verify that the home you wish to purchase is worth the price and that you have a positive credit history. Loans that do not require any of this information will be expensive. Interest rates and application fees are much higher than average. In general, you pay for secrecy.
No doc/No verification loans are not allowed on manufactured homes, mobile homes or commercial properties. The home you purchase must be a single family home, townhouse or condo.
There are three types of no verification/no documentation loans available:
- No-Doc/No Income-No Asset Verification Mortgages: NINA mortgages are completely private with little credit check. These loans are horribly expensive and only those with plenty of money will be able to afford these no verification loans.
With a no doc/no income no asset verification mortgage, borrowers really need only give the address for the home they wish to purchase and their social security number. NINA mortgages are only given to those with high credit scores and who have never had a late payment.
- No Ratio Mortgages: No ratio loans are often requested by men and women who are going through messy divorces, are recently widowed or are dealing with a change in career. Because their finances can be in state of disarray, no ratio loans keep them from having to deal with income verification.
No ratio mortgages do not require information regarding the amount of income or debts owed. The main reason people use this type of loan is because it would take them weeks or months to round up the necessary paperwork. They are the type of people who are willing to pay extra to have their mortgage expedited.
- Stated Income Mortgages: Self-employed men and women will find stated income mortgages to be most beneficial. Instead of proving their income, these people can simply state how much they make and back it up with their profit and loss worksheets.
Stated income mortgages do require some paperwork, but the program works best for those who make more than their tax forms show due to under the table payments or earn their living in cash payments like tips.
