An Inside Look at No and Low Documentation Florida Home Loans

Debate has been raging recently regarding the use of no-cost Florida home loans. Is it really a good idea to forego a down payment and focus on interest rates for the first few months of your mortgage? As you consider that or other possibility for purchasing, here are other options to think about:

No- and low-documentation Florida home mortgage loans.

These resources are considered a good way for people to keep privacy guarded or to receive a mortgage even when it’s logistically too difficult to document their income. However, less documentation comes at a higher price. You also must have good to excellent credit in order to be approved. Let’s take a closer look …

Stated-Income Florida home loans

To obtain a stated-income Florida home loan, you must disclose your annual income for the last two years, but instead of showing pay stubs and W-2 forms, you might show tax returns and bank statements. It may also be necessary to show a profit-and-loss statement, while possibly listing your your debts and assets for the lender.

Those who tend to need stated-income mortgages are people who are paid cash (like waiters and waitresses or those on commission) or are self-employed and make enough in income, but write off a lot on their taxes and thus, their true income is not reflected in their tax returns.

The interest rate on such a Florida mortgage loan can range from one-eighth to more than one percent more than a loan with a standard rate. How much more depends on:

• How stable your income is
• The debt-to-income ratio
• Your down payment amount
• Your credit score
• The appraised property value

No-Ratio Florida home loans

No-ratio Florida home loans don’t require you to declare what your income is. Because the lender doesn’t know this figure, the debt-to-income ratio can’t be calculated. However, you still have to list assets so that the lender knows the Florida mortgage loan can be repaid.

Someone who is going through a major life change such as divorce, death of a spouse, career change or retirement may want to get a no-ratio loan. No-ratio loans are also good for people who have abundant assets but for whom gathering documentation is too difficult and may cost more than the amount of interest rates.

No-Documentation Florida home loans

No-doc Florida home loans are also known as “no income no asset” or NINA loan. They require the least documentation. Generally, you only need to disclose name, Social Security number, the down payment amount and the address of the property being financed. You may also have to disclose your occupation and the length of time in that occupation. But typically, the better your credit score, the less documentation you have to show.

This type of Florida home loan is meant for people who want maximum privacy-public figures, well-known actors, high-profile citizens, and anyone else who doesn’t want to disclose their financial history, such as someone securing a loan by using an inheritance. Those who get a NINA must have an excellent credit score and never fail to pay a bill on time.

A no-doc mortgage rate may cost as much as three percent more than a Florida home loan rate, depending on the size of the down payment, credit score, assets and how much the borrower is willing to disclose about his/her employment.

Remember: Across the board, the less documentation provided, the more you’ll need to pay in interest. These Florida home loans are typically considered by those that value their privacy or have unique income situations.