Given the recent recession that has occurred, it is not surprising that many industries have been affected. One industry in particular that took a very good beating was the mortgage industry. Due to bad lending practices, many people and businesses were affected home foreclosures and the tight credit market. A particular type of loan that took a hit was no documentation loans. A no doc loan allowed for the borrower to state their income in the mortgage application. This meant that you didn’t need to provide any W-2s or pay stubs for the application.
Only in the past few month have lenders began offering no doc loans. Unlike full documentation loans where the borrower is required to show W-2s or pay stubs to prove their income, these loans allow the borrower to state the income that they were making. Because of this lack of documentation, these loans have earned a reputation as “liar loans” because many borrowers were over stating their income in the application. Because of these recent facts, the lending criterion for stated income loans has been increased. You can no longer be approved for a mortgage loan with a bad credit rating.
When lenders are looking at the loan applications, the one thing that lenders deem very important is the borrower’s credit rating. If you have a good credit rating then there is a good chance that you can get the loan approved. However, if you have a bad credit rating most lenders will not be willing to take the risk and give you a loan. Because lenders bear a significant amount of risk when approving these loans, they want to make sure that the borrower is not going to default on the loan. If the borrower has any previous history of late payments or defaults on the loan, they will most likely reject the no doc loan application.
Because these loans have only recently started to creep back into the lending market, many lenders are still hesitant in offering these loans. People who are interested finding a no doc loan lender should go online. There are many different stated income lenders that offer competitive interest rates on the loans. If you are willing to look around you can find a good lender that offers a good interest rate on the loan. Remember that should get at least 3 different quotes to ensure that you have the best interest rate for your loan.
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