As you know not every person who tries to get a loan qualifies for a loan. Banks want to feel that whoever they give a loan to is able to pay it back. The first thing you need to do is you have to have your financial business in order if you want to get a loan. The four main things that lenders look for when you go apply for a loan for a home are:
1) Down payment money - Lenders require you to have enough money for a down payment. A down payment for a home is usually anywhere from 3% to 20% of the purchase price.
2) Two years of steady employment - The lender wants to see that you can hold a job so you can pay the loan. It can be in the same field or one job that was held for two consecutive years.
3) A Good Credit Score - A lender will be quicker to give someone with a good credit score a loan. A good score is considered anything from 600 and above.
4) Your monthly income - has to be two to three times higher than the mortgage you are going to pay. They want to feel that you can cover your mortgage without having hardships that may cause a default (force you to go into foreclosure and the bank repossesses the house)
If for whatever reason you do not have these 4 things you don't have to panic. You can still meet with a lender anyway so they can tell you what you need to do in order to qualify for a loan eventually. There are however other loan options you may want to consider.
Low Doc or No-Doc Loans are loans that require a minimum amount or no amount of documentation in order to qualify for a loan.
They do however carry high interest rates. These type of loans are an option for people that regular lenders consider a high risk for a loan. A high risk by lender terms; is someone that will be unlikely able to meet the loan payments.
People who don't want to reveal their financial situation also tend to gravitate to these type of loans. That is because to get one of these loans you don't necessarily have to show pay stubs or tax returns to qualify for these type of loans. Low Doc loans may require a little more documentation that a No Doc loan. Of these type of loans, the No Income Verification Loan is the most popular also called the NIV. Like it states you do not have to show your income to qualify for it.
No Doc Loans are also called NINA Loans which means No Income No Asset Loans. These type of loans are also commonly called the Don't Ask Don't Tell loans. Because they don't ask you and you don't have to tell them your financial business to get one.
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