There are four types of home loans that are available for borrowers. The lenders matches the borrower’s profile to one type of the loan that best suits him. This matching is processed according to the borrower’s credibility to pay , rates and terms. Below are some details mentioned:
1: Complete Documentation Loan:
This is the basic of all kinds of loans. This loan is specifically designed for high credit score consumers who are employed and consists full income and asset documentation. Strong income level provides support to the current debts and the new loans. For strong and established borrowers, lenders offers attractive interest rates. Rates are set quite low to attract borrower .
2: Stated Income Home Loans:
This is second type of mortgage and in this kind of loan , lenders charge high fees and rates. This is due to borrowers’ eligibility based on the stated income. Borrowers are required to state their monthly income, but they are not required to verify it by the taxes returns or any other information. Moreover, they are required to provide a proof of their assets. The requirements are easy, such as high credit score, good amount of assets and two year consistent employment record within the same field.
3: Stated Assets Loans:
This type of loans is same as the stated income loans, as both require a high credit score. These loans offer compromises on the complete income and asset documentation. The lenders also charges high fees and rates for the execution and preening of these loans.
4: No Doc Loans:
These are the no documentation loans and they are the most expensive loans,meant only for those who are unable to meet the criteria for the earlier three loans. For these types of loans borrowers are usually moved from a W-2 to self employed status with in the time period of two years. The earlier mentioned types of loans require the two year consistent employment within the same field by the borrower. The eligibility criteria for this type of loan for the borrower is a good credit score. It sounds good for the borrowers as they can refinance within two years.
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