No-doc loan walkthrough

sarahheller By sarahheller, 9th Aug 2011 | Follow this author | RSS Feed | Short URL http://nut.bz/21z8_fkc/
Posted in Wikinut>Money>Mortgages

Need a mortgage but you don't have verifiable income? Try a no-doc loan.

No-doc loans

Qualifying for a no-doc loan is a much more complicated process than it used to be.  These loans are primarily used by business owners and the self employed in order to purchase real estate.  The process of qualifying for these loans can be complicated, but for many people these loans are the only way they can purchase real estate.

The term "no-doc" loan refers to mortgages that do not require proof of income.  Prior to the housing boom and subsequent bust, "no-doc" loans accounted for about 1% of all mortgages.  While they became much more popular during the housing boom, many banks and mortgage brokers stopped offering these loans at the beginning of the recent recession.  Banks have recently started offering these loans again, but the requirements are much different.

The first step of the process in order to qualify for a no-doc loan starts by finding a bank that still offers this type of loan.  After finding one, it will be time to start the process of meeting the bank's requirements.  In general, most banks will require a significant down payment; usually at least 20% of the full purchase price of the property.  Additionally, the bank will probably require that you show proof of assets with a total value of at least 10% of the total purchase price of the property.  In some cases, banks have requested to see assets on hand matching 100% of the total purchase price.  These assets can include retirement accounts, business holdings, cash on hand, and other properties.

The bank will need to verify the total value of these assets.  If the assets are not easily convertible to cash, this process might take several weeks or months while the bank gets reports from appraisers.  Some banks may also perform criminal background and credit checks.  At the end of this process, the loan will either be approved, or more information will be requested.

Be aware that many people have reported that they have had to repeat this process several times before finally being approved for a no-doc loan.  For this reason, it can take up to a year to be approved for a loan.  Since so many realtors have had clients experience these long delays, many now require their clients to be fully approved for a mortgage before putting in an offer on a piece of property.

Tags

Mortgage, Mortgage Loan, Mortgages, No-Doc Mortgage

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author avatar sarahheller
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Comments

author avatar Neha Dwivedi
9th Aug 2011 (#)

informative article sara.....

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author avatar Rathnashikamani
18th Aug 2011 (#)

Very special information: No doc loan!
+1 for this page.

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