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Pros and Cons of No Doc Loans
Nov 25th
Most lenders would require you to provide documents such as proof of income or employments and many other things. If you are self-employed or you don’t have a stable monthly income, producing such documents could be a problem. There are also some people who just want to keep their finances private. In these cases, they would want no doc loans. However, there are some things you need to be aware of before you apply for such loans. Just like any other loan, these loans also have its advantages and disadvantages.
One advantage of these self employed loans is its fast application process. Considering that these loans would not require a lot of documentation, you can easily get approved of the loan as long as you also meet their other requirements. It’s also not that hard to find such loans as more and more lenders now offer such loans online. You don’t have to choose the first lender you find. It would be best if you compare various lenders and the quotes they offer in order to find the best rate.
However, considering the risks involved with not verifying your income, lenders would most likely charge high interest rates for such loans. That is why before you apply for this loan, ask yourself if you really need it. If your financial privacy is worth the cost, then this could be a good option for you. It would help if you can get a copy of your credit report. Perhaps there are some errors in your report that could have affected your credit score. It is important that you correct these errors as it may help you get a better rate.
You won’t have a problem getting no doc loans if you have good credit. Most lenders would need proof of income in order for them to determine if you can afford the loan or not. But even without verifying your income, lenders may still be willing to lend you money if you have good credit. They would just assume that you have the capacity to repay the loan.
Negative Equity – Applying Refinance Program without Equity
Apr 15th
When the value of an asset secured by a debtor falls down below the outstanding balance exceeding the value of its loan then negative equity is achieved. Negative equity can be calculated by taking the value of the asset minus the balance of its outstanding loan. There are many factors that can lead to negative equity, and economic health plays major in this role.
What is negative equity and can it affect refinancing programs?
Negative equity or also coined as upside down can cause mobility loss in terms of assets and heavy psychological burden, and yes negative equity can majorly affect refinancing program.
There is no easy and quick solution to negate equity loss, but there are few things that you can do to enter refinancing programs even without equity.
- Estimate your remaining property value. There are many sites that offer this service for free. You can also hire an appraisal to do the estimate.
- Determine the level of your bankruptcy. If your debt is bigger than your house is worth, better ask for hardship program from your lender. Refinancing is close to impossible for this type of scenario, while hardship program can help reduce temporarily your massive debt obligation.
- Federal Housing Authority (FHA). If your house is covered by FHA, then you are qualified for their streamline refinance program. This way a much quicker and convenient refinancing service can be achieved. In addition, FHA Streamline Refinance does not obligate its members for an appraisal.
- Acquire Private Mortgage Insurance (PMI). PMI is an insurance company that protects its lenders from any default payments. They also encourage their lenders to finance assets that are loan to value (TLV).
- Finally, pay all your principal obligations. Liquidate assets, including your stocks, holdings, collectibles, and investments in order to pay your mortgages to nullify negative equity. Alternatively, you can also use a large tax refund to settle the mortgage.
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