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No income verification mortgage loans were very popular in the early 2000's. They provided loans to anyone with a certain credit score without verification of income. These loans are high risk and many borrowers entered into loans that they were unable to repay. As a result, many lenders have now removed no income verification loans as loan options.
Who Can Provide a Stated Loan?
There are still lenders available that can provide a no income verification stated loan but they are harder to get. Typically, these loans are only available to the self-employed borrower and require a significant down payment. Additionally, the credit score of the borrower must be impeccable.
The loans are offered at much higher interest rates, many times making them unaffordable. For example, if rates are 6 percent, no verification loans rates can be 10 to 12 percent and thousands of dollars more to acquire. These high rates mean payments are higher and loans are typically unaffordable.
Tips for Getting a No Income Verification Loan
Make sure that you properly state your income. Many people were tempted by beautiful homes and stated they earned higher incomes than they actually made. This is one of the many reasons that loans were defaulted.
Take an honest approach to income and debt. Be sure that you examine all additional fees, such as taxes, mortgage insurance and fire insurance. In addition, factor in trash collection, maintenance, utility costs and other fees associated with the home. Before you buy a home, be sure you know what the full picture entails.
You may find it makes more sense to use a traditional loan and reap the benefits of the lower monthly payment they can offer. You may have to provide the lender with a mass of documents, but it will usually save you thousands of dollars in interest and closing costs. Compare the costs of a no verification loan to a regular loan, then ask for a “needs” list from your lender. The needs list will provide with a list of documentation required to qualify the loan. You may find the list might not be as long as you thought.
A good broker will help you with your decision-making process and give you a comparison of programs and fees. Be sure to use a broker that is highly recommended or that you trust so that you are certain you are receiving the correct information.
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