For getting traditional mortgages, you must give the lender a set of documents as evidence of your financial health. These documents prove that you can repay the loan you are taking. But for many people, it’s hard to document income. Some also desire to guard their privacy, so they cannot avail of these mortgages. In such a case, no-documentation loans become the perfect option. As the name implies, a no-doc or low-doc loan needs little to no documentation. Today you can find a service that supports you in getting no-doc loans tailored to your needs. Such a solution leads to swift loan approvals and a streamlined settlement process.
What Do No-Documentation Loans Mean?
A no-documentation mortgage loan does not need the borrower to give the usual income documentation in place of tax returns and W-2 forms. They also order a property appraisal to check the investment’s resale potential.
Today, every lender needs to adhere to federal laws to verify the borrower’s assets and income. It ensures that they can manage their monthly mortgage payments. Today’s additional protections make no-documentation loans a good option for those with complex tax returns or non-traditional income.
Kinds of No-Doc Mortgages or Loans
There are several types of loans that fall in the no-doc category. They include the following:
- SISA or Stated Income, Stated Assets – These loans are designed without the confirmation or verification of the borrower’s income or assets.
- Stated-Income loans – These don’t utilize a W-2, bank statement, or any other source to confirm the applicant’s income.
- SIVA or Stated-Income, Verified-Assets loans – These loans are those for which the lenders will take your assets and use them as the basis of their approval. Another name for SIVA loans is bank statement loans.
- NIVA or No-Income, Verified-Assets – These loans are not much different from SIVA loans. The only distinction is that income does not get added to the application.
- NINA or No-Income, No-Asset – This type of loan was popular a few decades ago but is present only for real estate investors purchasing rental properties. This no-doc mortgage needs sufficient rental income to cover the new loan payment.
- NINJA or No-Income, No-Job, No-Asset – These mortgages don’t need the lenders to confirm income, employment, or assets. With this loan, the lender takes the borrowers’ word that their application for the loan is correct.
Situations When You Can Consider a No-Doc Mortgage
- You deducted huge business expenses the previous year – If you are an entrepreneur, deduction of expenses will reduce your overall income. It can decrease your likelihood of getting mortgage approval. A low-doc loan will help you in this case.
- You have a fluctuating income – Income fluctuations occur for self-employed or work in industries like sales. If you have a volatile income, a no-doc mortgage can be an ideal option for you.
- You’re a real estate investor – In the case of a low-doc mortgage, lenders can approve the mortgage based on the property value. Suppose the home you are purchasing is an investment. Your anticipated rental income can enable you to get approved without any other income documentation or assets.
Today, you can find no-doc loans solution provider that offers flexible loan terms and make the accreditation process easier for you. They also give you the ability to draw down cash with quick turnaround times. Thus, they simplify the entire lending process for the self-employed or those small businesses.