Tips for Non-Traditional Loans
If you plan on applying for a more unconventional Loan such as an interest only or a no documentation loan, you’ll want to plan ahead and follow a few simple steps to improve your chances of being approved for the loan. It will also save you time and frustration in the process, if you’re prepared upfront. Before your lender can ever approve you for a loan, he is going to need to verify important financial information. Here are three things you can do to smooth the process and help your application to go through successfully:
- Tip 1: Narrow your options
For this, you’re going to need to do some homework. There are a lot of different options available. You’re going to need to check out the ones most likely to serve your purposes. So first, you’re going to want to be sure what it is that you want to accomplish with this loan. To find the best mortgage rates and loan package that fits your needs, you’re going to need to sort through a lot of different options. You may want to have your mortgage broker or loan officer check out the best ones for you, and then explain all the differences so you can decide which one works best in your particular situation.
- Tip 2: Know Your Credit Report
Before you do anything, you’ll want to get a copy of your credit report and see what’s in it. Look it over carefully for errors. If you’re applying for a no-documentation loan, your credit report is going to be the most important piece of the puzzle as far as your lender is concerned. Once you’ve checked over your credit report, you can contact the reporting companies to correct the mistakes and also have outdated information erased. You’ll want to get rid of everything you can that might negatively affect your credit score. This will take some time, but is probably the most important thing you can do to improve your chances of getting the best loan. Start as soon as possible, so as to give the reporting agencies time to update your information. It’s a good idea to get everything in writing also. For example, if you had a debt or collection item paid off, you’d want to make sure they send you a letter stating the debt has been satisfied in full. That way, if it should show up again on your credit report, you have the necessary documentation to get it removed. You also have proof for the lender’s satisfaction, although they will most likely want to see a credit supplement showing it paid on your actual credit report as well.
- Tip 3: Organize Your Paperwork
Your lender will request various financial documents from you such as bank statements and paystubs. They may want to see you have assets enough to satisfy their program. This means they may want to see your 401K statements. If they do, remember they will want to see all the pages of the statement, not just the summary page. This is true for bank statements, too. So, if you have all your paperwork organized in advance, the process can move that much faster. Think about it this way, you’ve spent all this time shopping for a great rate, finally found it, but now you chance losing it as the rates rise while you’re in your basement or attic searching for a lost tax return. Take the time to get organized. Also, it’s a good idea to make copies of your important papers to give to your lender rather than fiving him your only copy and hoping he remembers to give it back when he’s done with it. Finally, if you’re purchasing a home, talk to your lender first and line up your financing. That way when you do sign a purchase contract, you won’t be waiting and hoping you’ll qualify, because you’ll already be approved. Those who plan ahead are much more likely to get the mortgage loan they prefer, with their desired terms, and skip the aggravating and costly delays. So, what are you waiting for? Go talk to your mortgage broker, get a copy of your credit report, and get your important papers together. You’ll probably sleep better, too.
Not going to happen… haven’t you read the news? Good luck with getting one of these loans. The game is up and everyone is pulling these products off the shelf.
I take it you’re a glass half empty kind of person? Whether or not interest only, or Lite Doc or No Doc loans are decreasing in popularity on the secondary market is really irrelevant. Underwriting guidelines ebb and flow with the availability of money. We’ve seen it before and we’ll see it again.