What Is a No Income Verification Loan?
If you are in a situation where it is difficult to verify your income, but you still want a mortgage, the no income verification loan could be exactly what you are looking for. This type of loan does not have the standard requirements of income verification that come with a regular mortgage.
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Types
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You could avoid verifying your income with a few different types of mortgage loans. The stated income loan is one option that you have and it involves simply telling the lender how much you make without verifying it. Another type of loan is the no-ratio loan. This type of mortgage does not use any financial ratios when qualifying you for the loan. The NINA, or no-income, no-assets, loan is another option that you could pursue. This option does not require any income verification or any asset verification.
High Risk
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In the eyes of the lender, this is considered to be a high-risk mortgage. Since they are not verifying your income, you could easily lie about how much you make and qualify for a larger loan. With this type of loan, the lender is leaving part of the qualification process up to you. While they ask you to be truthful, there is no income verification. This means that there is a higher likelihood of default for the lender.
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Interest Rates
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When you get a no income verification loan, you should expect to pay a higher rate of interest. Lenders have to make up for the additional risk that they are taking on by charging a higher interest rate. With this type of loan, you can expect to pay at least one full percentage point more than if you simply verified your income. Over the course of a 30 year loan, this will be a difference of thousands of dollars.
Income
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Those who use this type of loan are often self-employed or have some other type of unusual income. If you are self-employed, you might get income from several sources and have trouble documenting it. If this is the case, a traditional lender may not be willing to work with you. If you take many deductions on your tax return, it might look like you are not making much money, when in reality, you live a comfortable lifestyle. With this type of loan, you can still qualify for a loan without all of the hassles of regular verification.
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