No Income Verification Mortgage – Advantage and Risks
Not all of us work in a 9-5 shift. Some of us pursue lives as freelancers or as business owners or those who work at flexible times. Being independent from the regular hustle and bustle of the corporate life can be liberating but it also puts you at a disadvantage in terms of qualifying on loans or getting a mortgage. This is where the no income verification mortgage comes in. Never make hasty resolutions. While the term looks like a payday loan scheme, be warned, because even if the lender does not require you to show proof of your income stability, you still have numerous requirements to show that you are qualified for the loan.
The no income verification mortgage requires you to have a good credit score at least. Why is that so important for lenders? Without income verification, they cannot question you on your sources of income. They might be interested in knowing your monthly income on average but they do not dwell around it. What’s more important for them is for the borrowers to have a pretty good record in paying debts, and keeping their financial responsibilities clean. If you want to get this mortgage, you have to prove that your financial reputation is clear so review your credit report and analyze your score. If you have at least 700-740, the lender might consider you for that loan.
Sadly, such “convenience” also poses some risks for borrowers. While the no income verification mortgage increases your chances on getting a loan, it also increases some costs and you have to expect that you will be paying a much higher rate. The mortgage requires a higher interest rate compared to standard loans. The reason is simple: they want to reduce the risks so they have to increase the interest rate. If the bank or lender can verify your salary, then they can make better assumptions as to how much you can really pay and afford.
Also, even with a no income verification mortgage, you are not fully off the hook. If you are in control of the money you earn, banks can assume that you can lie about how much you really earn. This poses another level of risk for the mortgage. If you decided to get a posh home that you cannot really pay for, the bank is in a bigger chance of financial loss since you will only end up defaulting on your payments which is something that the lenders have to address. It is not discouraging to use the mortgage as long as you have your mind in the right place and you know the repercussions of not paying your loans. Interest rates are high, but if you prove your reliability in terms of paying your dues, then the lender might be willing to make adjustments on your mortgage.
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