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What Are No Doc Home Loans (And How Do I Get One?)

I have to assume that if you are reading this article then clearly you need to know a lot more about no doc home loans. Obviously there are a wide variety of reasons to want to get this type of mortgage loan. The biggest advantage for using them is that you don’t need to report private information such as your monthly income amount or even your source of employment. And for the most part you don’t have to show any of your assets on the loan application either.

No doc loans are a terrific method for you to get all the money you need even if you have no ability to come up with documentation that normal home mortgages require. And it can be that the your just don’t want to reveal this information to the lender. Maybe it is because you are self employed or unemployed. You can use no doc mortgage loans for buying: single family homes, condominiums and town homes. You can use them for purchasing non owner occupied investment property as well, although a different set of requirements are in place for these. The income property has to have a lower loan to value ratio AND you’ll need a down payment.

The two biggest factors that lenders look at when you are looking to get a no doc loan are:

*Credit History, and
*Credit Score

With that said, like when applying for a non-owner occupied investment property, you’ll almost always need a sizable down payment before they’ll even consider giving you the loan.

You’ll need to show your loan officer a spotless history of prompt and timely credit payments and have a credit score greater then 680 and above. In that whoever is underwriting the loan has the final decision, it is important to bump up your credit scores.

By now this type of home loan must be sounding like a great deal to you. So, what are the drawbacks of these types of loans? Well, first and foremost, it is the high interest that the lender is going to hit you with. It is not at all unusual for the interest rate to be two percent or more above any conventional mortgage you might try to get.

Now you know what you are up against BEFORE you go to your local bank or credit union. With this information you should be at ease when you decide to take the plunge.

Pre-Approved Home Loans With Bad Credit: The Wiser Choice

One of the biggest challenges for home buyers is not in finding the home they want to buy, but in having the finance necessary to complete the purchase deal. Often, home hunters know what they want but with mortgage approval taking anything from 60 days to 90 days, the chance to get it is lost. The availability of pre-approved home loans, with bad credit even a factor, solves that problem.

Knowing what can be safely borrowed before beginning the negotiations to buy a property is a useful thing. So, securing pre-approved loans places the borrower in a stronger position. The effort is therefore well worth it.

But there is a process that has to be gone through, with credit information and copies of your credit report required before the mortgage lender can decide whether to grant the home loan or not.

Key Advantages of Pre-Approval

So, what are the advantages on offer to borrowers, and how difficult is it to get pre-approved home loans with bad credit? Well, the key advantage is that with pre-approval, a home hunter knows exactly how much they have to buy a home with.

This not only helps in the negotiation, but ensures that the home hunting process is shortened considerably. There is no need to waste time viewing homes that are already more than the pre-approved sum. What is more, by securing pre-approved loans it is easier to get an agreement with a real estate agency, since they are more likely to sell to someone assured of the asking price than someone who must wait to confirm they have the finances.

The process takes 60 days to 90 days, but with the confirmation letter provided before the search for a property begins, the early patience is worthwhile. The home loan is guaranteed, so the desired property can be purchased on the spot.

The Pre-Approval Process

Getting a pre-approved home loan with bad credit is no easier or harder than it would be to get a normal mortgage. It is simply a matter of acting earlier to secure the funds needed to buy the home that the borrower wants. But the process does require clear information, with personal and financial goals stated in a Letter of Intent.

Other information needed as part of the application is a Purchase Agreement (if your current home has been sold), confirmation of tax returns, and a breakdown of typical household expenses. But securing pre-approved loans also means providing a copy of your credit report. These can be sourced from one of the three rating agencies – TransUnion, Equifax, and Experian – and provides official confirmation of your credit status.

Also, bankruptcy papers are needed (if applicable), details on current debt and assets owned need to be verified. If successful, an applicant will receive written documents detailing the size of the home loan approved, the interest rate charged, the required down payment, and repayment terms.

Other Considerations

There are mortgage providers that specialize in pre-approved home loans with bad credit, but be aware that there are usually processing fees connected with them. They should cover administrative costs, closing costs, and appraisals, so there should be little or nothing extra to face once the deal is done. Basically, securing pre-approved loans makes sure everything is covered.

Closing costs are often an expensive aspect of buying a home, and include such things as title deeds, legal fees, and document processing – everything needed to ensure the home purchased with the home loan is legally owned by the purchaser.

The Absolute Importance Of Properly Obtaining Buyer Qualification Information For A Successful Sale!

Imagine your home is on the market for sale. You have worked extremely hard at making sure your home is the perfect property. Your family has staged the home with just the right decorations, the carpet have been professionally cleaned, the front and backyard landscaping has been manicured, and you even washed all of the windows of your home YOURSELF :)

Long car rides on the weekend to step out of your home temporarily as buyers go through your home, you leave the home so that they can be undisturbed while viewing the property. Then the big day comes and the full price offer with no closing costs requested is received on your real estate agents fax machine. You gladly accept the offer and start packing all of your worldly belongings and start preparing and getting ready for your cross country relocation move to a better life and a new career, and a larger home!!

Everything seems to be going smoothly one week into the process and the lender and the buyer’s agent have been conducting the usual inspections (home inspection, termite inspection etc.) and everything seems to be on track, nothing out of the ordinary.

Your realtor has been assured with a generic realtor association form from the buyer’s agent that was incorporated with the contract that the buyers will qualify.

On moving day, the trucks arrive, the moving crew is there, however loan documents have still not been delivered to the title/escrow company.

What’s wrong with this picture and what could have prevented this all to common scenario from occurring?

1. The generic form that was submitted by the buyer’s agent was probably created and submitted by the mortgage company doing the loan, not the underwriter. That is simply like the fox guarding the hen house. Most mortgage officers can not approve a loan, only a banker’s underwriter can!

2. Many buyers agents simply don’t know how to properly qualify their clients since there are so many new agents in the business struggling to get into and stay in the business.

3. Even if a buyers agent does a good job at the preliminary qualifying, they are not in the loop to all of the actual qualifying information. Since credit score, debt to income ratio, and other information is usually asked for by a lender many real estate agents allow the mortgage professional to do this and unfortunately many agents are willing to go for a “hail mary” to see if the loan will close (%50 – %50 is good enough for some).

In such a fast moving world where does a seller have a chance to over come these all too common situations?

1. Insist that the buyer sit for a formal loan application and submit proof of that application going through the process of approval with a reputable lending institution (if they haven’t already done it). Request that this loan application or Good Faith Estimate is submitted as a minimum for Seller approval as a bare minimum. “Why fly blind”, either the buyer or the seller?

Q: What if the buyer is afraid of revealing confidential information such as social security #, birth date, or even address?

A: The buyer’s agent can at a minimum obscure this confidential information on a copied version of this document with white out or correction tape and then fax it or other wise deliver it to the listing agent with the buyers signed permission to disclose this information. What more is there to hide, why hide anything?

Protect your families interests and consider consulting with your professional representation on how you can prevent this most common problem in the real estate industry. Of course consult with your own legal counsel, real estate agent, accountant, and other professionals and advisors relating to this articles content. The author of the content of this article accepts no responsibility for the implementation of this articles content and it is purely for informational purposes and for informing the public about potential issues relating to consumers and the real estate negotiation process. Please consult your professional counsel about implementing any of this information for your individual situation first. All situations are unique and very different consult your attorney or real estate professional representation before considering to use any of the above information.

Visit http://www.personalizedhomesearch.com for more great articles relating to the real estate industry and relocating to sunny Arizona! -Rick & Jennifer LeForce