It always amazes me how the financial market finds answers for people’s problems. If there is a niche in the market, lending institutions will spot it right away and will develop a product to cover such niche. The home loan market has been experiencing changes and so have the products being offered. No-doc home loans and home equity loans are fairly recent and, though they only work for a very specific part of the social group, they are becoming more and more popular as times goes by.
Needless to say, there are many consumers out there who do not have a clue of what these loans have to offer, which is a pity as many of them are missing out on a great chance to finally get the home of their dreams. This article seeks to shed some light over these loans and their versatility.
What Do These Loans Entail?
When reading the title of the article, the idea of a no-credit check loan comes to mind. But this is not the case of this loan. No-credit check loans are more often than not secured loans, whereas no-doc home loans (or no income verification home loans, as they are also called) can be both secured and unsecured.
As I mentioned before on this very article, this type of loan is reserved for only a small group of consumers, not because others would not qualify, simply because they would not find any benefit in applying for this loan.
No income verification loans are specially tailored for those tenants or homeowners who have a hard time documenting income. Self employed people, tipped employees, independent contractors, people who have not been on their jobs long enough, etc. They will find it harder to get approved for a regular loan due to the fact that it might turn out to be difficult to prove their yearly income. With no income verification home loans ad home equity loans, they will have access to the kind of finance they need without going through the hassle income verification presents.
Of course that not everything is perfect, this loan does have some drawbacks which should be taken into account before applying for funding. No doc home loans might end up being pricier than regular loans because the risks undertaken by the lending institution are somewhat greater. Interest rates are a bit higher and the loan might carry extra fees regular loans do not carry. However, for those who have problems proving their actual income, these additional charges might not be of concern.
To be the perfect candidate for this loan you must be on a very specific situation. My advice to those who email me with questions concerning this type of loan is that, if they have the means to obtain a regular loan, they should. What is the point in applying for a no income verification loan if yours is perfectly verifiable? If you are thinking that the lack of verification means the applicant will receive the funds faster, you might be right, but the time one can gain is not significant.
Unfortunately, this loan is only available for those who happen to have good credit and a high credit score. People with a bad credit score will have the hardest time trying to find a lender to approve their loan.