No Income Mortgage – Pros and Cons
A no income loan is a loan where the person borrowing does not have to prove their income. When the prices of real estate were high, this was the most popular kind of loan one could get as it proved to be the easiest way of financing real estate. Unlike the loans that are usually made under the guidelines of FHA or VA, the no income mortgage loans requires no supplies of your income to be verified, and this is why they are popular because they are so easily obtainable.
A no income mortgage loan only used to be used for people who had excellent credit and who needed to obtain their real estate. Due to the fact that the loan is not allowed to go beyond ninety percent of the character’s value, the borrower who wanted to make the no income loan would have to be prepared to make a down payment of nothing less than ten percent, or they should have ten percent equity if their character is being refinanced.
As time passed and real estate prices continued to soar, no income loans became more popular because they were offered to those less credit-worthy borrowers, who would have paid more interest on this loan compared to one that had more strict conditions.
The no income mortgage is perfect for those who don’t always have a steady paycheck every month, people like business owners, those who have criminal records, or those who are self employed. Another reason why this loan attracts so many borrowers is because they do not have to proportion their private financial situations with anyone.
As no income loans do not need to be made under the guidelines (VA or FHA), you have no limit when it comes to the size of the loan you wish to make. This is why many of these loans were made to people who could not truly provide them, because the lenders didn’t have enough information to border the size of the loans.
No income mortgage loans may be the easy way out and provide you with funds when you need them most, but remember that with these loans that are so easily obtainable, the rate at which you need to pay back is typically very high.