To Doc or Not to Doc, That is The Question!!!

Many borrowers shopping for mortgage loans are pretty well informed about the different types of loan products available. A qualified & competent Loan Consultant can guide and advice borrowers through some of the options: 40, 30 and 15-year fixed, 10/1, 7/1, 5/1, 3/1, interest only, or option ARM. But many borrowers and even a few Real Estate Agents are not fully informed about the different levels of documentation required.

Different lenders name and describe these levels of documentation differently, but in general they all fall into these categories: Full Document Loan (Full Doc), Stated Income Loan Verified Asset Loan, and No Document Loan.

The fully documented loan (Full Doc) give borrowers the advantage to obtain the most competitive rates, highest loan amount, widest band of lenders, and a lot more variety of loan products. The “Full Doc” loan requires detailed documentation supporting income and assets like: 2 or 3 months of asset statements (savings, checking, 401K, etc, etc), 1 or 2 months of pay-stubs and W2’s for the most recent 2 years. Self employed borrowers must document their incomes with the last 2 years of Federal Tax returns and a year-to-date profit and loss statement.

The Stated Income Loan is for borrowers who either cannot or prefer not to provide documentation of their income with W-2’s or tax returns. An example might be a self-employed individual who writes off a lot of expenses. Lenders will charge a higher rate for these types of loans.

The No Document Loan depends heavily on the equity in the property and the borrower’s credit. This type of loan invariably carries a higher interest rate.

The important point of this article is to know that all these different types of loans exist to serve the interest and requirements of virtually every borrower.

Comments

2 Responses to “To Doc or Not to Doc, That is The Question!!!”

Fraud scheme in San Jose from Norma Valdovinos Century 21 Golden Hills on November 10th, 2007 6:47 AM

[...] The second person named on this article is Linda Tran, which I believe is the loan agent working for one of the several companies named on the lawsuit. Linda Tran arranged the horrendous loans by exaggerating their income and assets using no-documentation loans also known as stated income loans. [...]
FHA Modernization Act 2007, FHASecure loan program, San Jose California on December 14th, 2007 8:18 PM

[...] However, homeowners must have a history of on time payments for at least six months prior to the reset, must also have a non-FHA insured ARM loan which has already reset or is scheduled to reset. Homeowners must also prove to have sufficient income to make the mortgage payments. This requirement may disqualify many homeowners who bought homes beyond their means with “stated income loans”. [...]

Leave a Reply