Documentation Loans
What you need to know about Loan Documentation
- Full Documentation - In this case you supply a current pay-stub and past 2 years W-2s. The lender will call to verify your employment for the past 2 years at a minimum. This is the most common type of loan documentation. They carry the best rates because the lender can verify your income and ability to pay the monthly mortgage payments. In addition to verifying your income the lender will most likely ask to verify two months of reserves. They will want to see at least two months of your full mortgage payments, or PITI (principal, interest, tax and insurance), readily available in liquid assets (checking, savings, or retirement accounts).
- Stated Income Documentation - Under this scenario you only supply the phone number for your work and the lender will only verify employment. They do not ask for income verification. This is typically utilized by many self-employed individuals that do not want to supply 2-years of tax returns and a year to date profit & loss statement. The lender will accept a CPA letter as verification of business existence. The lender will tend to have stricter guidelines since they are not proving the level of income. They may require higher credit scores or limit the loan amount based on the appraised value.
- No Documentation (No Ratio) - These loans are exactly what it says you do not supply income or employment documentation. The loan is based solely on your credit score and the appraised value. As with the Stated Income loans the lenders will tend to be even stricter.
- Remember that as you supply less documentation to the bank the rates will increase accordingly! Full documentation loans yields the best rates!
There are 3 basic types of loan documentation. Below is a list and a brief description of why borrowers use them
Apply Now and let one of our professional lenders discuss with you which loan type fits best your financial situation. Don't let someone put you into a loan that doesn't fill your need!
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