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Thursday, January 22, 2009

No Documentation Loans - What Are They Used for?

By Gressly Stevens

Are you self employed, an independent contractor, or a tipped employee? If so, then you know how difficult it can be to find a loan or a mortgage. When you cannot prove your income it becomes very difficult to get a good mortgage.

There is a way that you can get a mortgage without many difficulties, though. You can use what is called no documentation loans to get what you need. Here are the situations that are perfect for the no doc type of loan.

Those that are self employed are perfect for this type of mortgage. They typically do not claim all the money they make for various reasons. This can make it very difficult to prove their income. There are programs called stated income programs that are just right for you to use in this situation. They will not verify your income on a program like this.

This will get you a mortgage without any trouble. You will not have to prove your income or anything else that has to do with money. This type of mortgage exists becuase there are situations that it is necessary for.

If you are one that works for someone else, but are considered an independent contractor, then you can also use the no documentation loans to your advantage. You probably get paid cash, which can make it difficult to prove what you actually make. This would be another great time to use the stated income program.

This will allow you to not have to worry about proving where you work or what you make. This is almost like being self employed, but not quite. You can refinance or get into the home you are after with the stated income program if you are an independent contractor and it will be pretty easy for you.

One more situation that the no doc loan is great for is tipped employees. These are usually bartenders and servers, but anybody that makes the majority of their money from tips qualifies. This person typically does not claim all their tips and this makes it hard to prove your real income.

However, you can use the stated income program to get the mortgage you are after. This will give you the option of just writing down what you make and signing it. They will not be proving your actual income or your employment so you do not have to worry about that.

No documentation loans should not scare you, and you should not feel like you are doing something wrong. The interest rate will be a little higher than a normal mortgage, but that is due to the lender taking a little more of a risk on you. These programs were designed for this use, though, so use them.

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