Available for Many Real Estate Transactions
The first recorded evidence of lending comes from about 3000 BC in Mesopotamia when farmers would borrow seeds and repay the debts with food. Writings show that the maximum interest allowed at the time was 33 percent.
As years passed and currency came to be used, people would borrow money to buy real property and the concept of a lender using the property as collateral became popular so there would be less risk of losing money.
According to better.com: The first real mortgage loans in America weren’t issued until the late 1700s, after the formation of the first commercial bank. By the late 1800s, banks and mortgage loans were common but still unlike the mortgage loans we see today. At that point in time, balloon payments were common and the mortgage loan terms offered by lenders were a lot shorter than you’d expect—making it tough for buyers to use them or even qualify.
The main focus for mortgage lenders is risk, meaning how sure they are that they will be paid back. The three main types of property are 1) Primary Residence 2) Second Home and 3) Investment property. Lenders feel the most risk involves investment property and the least is someone’s primary residence and so they usually charge higher interest rates when there is higher risk.
Sometimes, for investment properties, a lender may consider the Debt Service Coverage Ratio (DSCR) for a property to determine risk in making a new loan. This means they will consider future income (rent) in making a decision on granting the loan. If the future income for a rental property will exceed the expenses (mortgage payment, taxes, insurance, etc.) then that is an attractive investment for both the borrower and a lower risk for the lender.
Most people derive income from jobs. They have a set salary or wage and they receive regular paychecks and W-2 forms at the end of each year. Many people, however, derive income from self-employment or other sources and it is not easy for that income to be documented. Therefore, lenders have set up loan programs which include “no income verification” guidelines and those loans are available for the three types of property mentioned above.
A lender will still examine the property, the borrower’s credit, and other factors but the hassle of putting together a lot of documents pertaining to income is not necessary.
How to Apply for a No Income Verification Loan
Consulting with an experienced mortgage loan consultant with excellent reviews and a solid reputation is the first step. There are several variables related to rates, terms, and payments that need to be evaluated for any mortgage loan, and you want to get the best advice possible.
Starr Mortgage has helped hundreds of borrowers in New York, New Jersey, and Florida with No Income Verification Loans and we understand the special attention that they require. A phone call to (845) 348-3172 will put you in touch with a licensed mortgage broker who will work hard to help you reach your goals.