Is it risky taking out a no doc mortgage loan?
2007-10-18 07:05:38 · 7 answers · asked by The Lady 2 in Business & Finance ➔ Renting & Real Estate
only if you overstate your income and the housing payment is over your budget. All your monthly debt plus your new mortgage payment and taxes and insurance combined, divide that by your true monthly gross income should not be higher than 50%!!
There are several no-doc loans. If your score is 680+ and you had a job for last 2year in the same field than you're qualified for the best rate no doc has to offer.
Although people are telling you that the rate is sky high, that's not always true so look for a lender that specialize in the no doc deals. My customers who has average loan size of $300K with 10%down with 680+ credit gets 30yr fixed mortgage with no prepayment and zero points at 6.375% apr of 6.45%.
( I do not fish for business at this site. Feel free to ask me mortgage related questions but be advised that I will not take your case!!)
2007-10-18 07:46:19 · answer #1 · answered by solee1201 1 · 0⤊ 0⤋
You cannot accept broad generalizations about No Doc Loans.
Some believe they are ALL BAD. Not accurate, the trick is getting a good mortgage person who knows when to use them and when not to.
I just closed a 30yr fixed for a couple with above 692 scores and 30% equity at 6.5% - They went No Doc. That's not a bad interest rate at all.
If you have good credit scores and are not buying with 100% financing, the no doc loan is not always a huge difference in interest rate. It can actually simplify the process. It's best to go full doc, but there are legitimate reasons for going NO
Doc.
The problem with NO DOC is getting a mortgage person who is using it to push your income beyond what you actually make so you can qualify. Then you are signing a paper in title that clarifies by doing so - you are lying........brushed over quickly by some.
You need to understand "afford" and "qualify".
You can likely "qualify" for a huge payment, but can you "afford" a huge payment? I may qualify for a 5k payment a month.......but I would never saddle myself with that much monthly obligation.
If your loan is a fixed rate arm, you better make certain that your fully adjusted payment is manageable on your current income........because you have no guarantee you will have the equity to refinance it when it adjusts. Plus the adjustable rate adjusts and could continue to adjust.
If you dont understand why your going No Doc, or whether or not you assume more risk with a particular loan product, you need to keep asking. Do some research and see if the answers you are getting are trustworthy. There are bad loan officers.....some who don't even understand homeownership or loans themselves.
Remember you're asking someone to advise you on the biggest and longest term purchase of your life........have they made that purchase yet themselves and do they have the financial history to be advising others??
Good Luck
OBAâ¢
2007-10-18 14:50:47 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Well the terms won't be nearly as good as if you were able to document your income. Outside of that there's not neccessarily any extra risk to you as a borrower. Like all mortgages, make sure that it's fixed for an appropriate amount of time, or that you're comfortable with the maximum payment adjustments possible, pre-payment penalties and all the other terms that come with the loan.
2007-10-18 14:20:26 · answer #3 · answered by matzael 3 · 0⤊ 0⤋
The risk to you is a sky high interest rate. This is one of those types of loans that are sub-prime and risky for the lender.
The risk to the lender is that you don't have anywhere near the income you tell them that you have and the loan goes bad (which is why they are pricey now).
Good luck!
2007-10-18 14:14:46 · answer #4 · answered by Rush is a band 7 · 0⤊ 0⤋
Not for the borrower, but for the bank. Which means a high rate. It also means that you are going to have to put down a large downpayment, and your mortgage insurance (Assuming that you have it) will be huge.
2007-10-18 14:50:43 · answer #5 · answered by ii7-V7 4 · 0⤊ 0⤋
Risky for the lender, NOT you. It's a piece of cake on your end. All you need to scrutinize is your monthly payment, how long it's fixed for, and what happens if/when it adjusts. http://www.potomac-md-homes.com/
2007-10-18 15:50:41 · answer #6 · answered by Anonymous · 0⤊ 0⤋
the rates will be super high...and you will need to put at least 10% down. and have a 720+
with FHA you can put 2.25% down....or with MyCommunity you can have a 620 and put zero down
2007-10-18 14:10:11 · answer #7 · answered by Anonymous · 0⤊ 0⤋