March 30, 2021

No Doc Refinance Mortgage loans USA 2021

No Doc Refinance Mortgage loans USA 2021

No Doc Refinance Mortgage loans USA 2021

 

What Are No Doc Refinance Mortgage loans?

No doc refinance mortgage loans is a type of loan that requires no documentation or very little documentation to get a home loan to pay off the mortgage. The interest rate is usually very high on no doc refinance mortgage loans in comparison to regular mortgage loans. No doc refinance loans or non-QM loans don’t fall under the pre-described guidelines of the federal government and Consumer Financial Protection Bureau’s (CFPB).

Unlike traditional mortgage loans, No doc mortgage loans require no proof of income, employment, and assets. These types of loans were very popular before the financial crisis of 2008. Many unaccountable people bought and sold housing properties from the year 2000-2008, which led to a significant rise in property rates. To get a no doc to refinance mortgage loans, one only needs to show their high credit score.

First, It was only for the people who can’t document their income or employment status or for the people who don’t have a fixed earning. Granting no doc refinance mortgage loans were less headache for the money lenders as they do not require any paperwork so they start encouraging such loans even to the people who can easily show their income and employment status.

This greed leads our economy towards the financial crisis of 2008 as many money lenders provide mortgages to people without checking their ability to pay back the loan. Many lost their jobs and homes due to the crisis. Borrowers and money lenders both used to find no doc refinance mortgage loans convenient and they even name them NINJA loans which means NO INCOME, NO JOB, OR ASSETS.

These loans were easily accessible and borrowers could loan huge amounts without showing their repayment capability and when money lenders didn’t get their money back on time they simply seized the property of the borrowers. No doc refinance mortgage loans used to come with high risks so when common people started taking such loans, it brought down the whole economy due to higher mortgage rates and unaccountable cash flow in the market.

Who Needs No Doc Refinance Mortgage Loans?

Even though No Doc Refinance Mortgage loans are high in risk and have a high rate of interest. They still exist in the market for a reason. People demand no doc refinance mortgage loans or nowadays term Non-QM loans. Many people can’t disclose their income and assets openly to get housing loans. Therefore they need no doc refinance mortgage loans to fulfill their needs such as:

  1. Any businessmen who can’t disclose his/her net worth due to the high amount of expenses in the last year as well impact their net worth and damage their credibility. Thus, you won’t be able to get the mortgage approval through regular means.

 

  1. People who have irregular income can’t apply for a regular housing loan. They need No doc refinance mortgage loan to invest in property.

 

  1. Another situation is if you have a high net worth. People who find explaining their income or assets through regular means will damage their financial stability or if you have certainly inherited a large sum or won a lottery will find no doc refinance mortgage loans their best option.

 

  1. If you are a real estate investor then no doc or low doc refinance mortgage loans are highly considerable as you can easily invest in the properties and buy and sell them according to your needs. No doc refinance mortgage loans are highly used by real estate investors.

 


Types Of No Doc Refinance Mortgage Loans USA 2021

There are mainly 4 types of no doc refinance mortgage loans available in the market. Let us discuss what they are and who uses low doc mortgage loans.

  1. SISA 

This was one of the high-risk no-doc refinance mortgage loans in the market and one of the main reasons for the financial crisis in 2008. While applying for this no doc refinance mortgage loan one only needs to state their annual income and assets and the money lenders will accept them and provide the loan against such non-verified documents.

These low doc mortgage loans might be good for the investment I properties but no not ideal for owner-occupied properties. After the Dodd-Frank Act in 2010, these loans are not easily available, and very limited people deal with SISA (Stated Income, stated Assets) mortgage loans.

  1. SIVA

This is the second type of no-doc refinance mortgage loan where the borrower only discloses both their income and assets on the loan application but a lender can verify the assets of the borrower. The lender may also demand the bank statement from 6 to 24 months depending on the amount of the loan.

Mostly self-employed individuals with high returns rely on such no doc refinance mortgage loans and individuals who deal mostly in cash. If you can show the proof of income on your bank account then you can apply for SIVA.

  1. NIVA

NIVA means NO INCOME and VERIFIED ASSETS. This is similar to SIVA no doc refinance mortgage loans. In this type borrowers either don’t have an income source or don’t want to disclose it but they can verify their assets and get the desired loan.

People who have inherited properties or retirees can apply for NIVA. The applicant must need to provide a pension statement or investment account documents to get approval on the mortgage.

  1. NINA

NINA means NO INCOME, NO ASSETS. NINA requires the fewest documents among all the no doc refinance mortgage loans as the applicant doesn’t even disclose his/her income and assets on the mortgage loans application. Most of these loans are approved on the FICO score and faith between the borrower and lender.

An applicant will only provide the name, Social Security number, down payment amount, and address of the property he/she wants to finance. The lender will still grant the loan money based on property and hope to receive the monthly payments.

People who are looking for maximum privacy or work under secret government agencies or foreign companies are always in need of such loans. Most of these applicants have an excellent credit score to qualify for no doc refinance mortgage loans.

Advantages And Disadvantages Of No Doc Refinance Mortgage Loans USA 2021

POSITIVE

  • No doc refinance mortgage loans are an easy and fast way to get the mortgage on housing property in comparison to a long and complex process with chances of rejection.
  • People who have been facing rejection due to strict documentation can apply via low doc or no doc refinance mortgage loan.

NEGATIVE

  • Low doc or no doc refinance mortgage loans money lenders are very limited and not easy to find especially after the 2008 financial crisis. Those who lend money with low doc requirements mostly deal with regular and trustworthy borrowers only
  • The interest rate of low doc loans is not fixed and at least 3 percent higher than the regular mortgage loans. The rate of Interest also varies on the size of down payment, verified assets, and credit score.
  • You must have a pristine credit score to get the approval on no doc refinance mortgage loans. Also, you must pay a sizable amount as a down payment as a trust factor that you will repay the money in time.
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