By Wendy Clay on November 4, 2011
.jpg.aspx?width=75&height=75) No income verification home equity loans are secured loans that use your home as the collateral for the loan and require very little paper work to acquire. This special type of second mortgage can be a great loan option for those who work on commission, are self-employed, have professions for which it is difficult for them to document income levels, or simply need money quickly and don’t have the time needed to gather the requisite documentation for traditional home equity loans. No income verification home equity loans can be further divided into three types, each of which has slightly different requirements but none of which require documentation such as paystubs or W2 forms. These types are:
- Stated Income Loans: These loans are best for those who are self-employed or paid through commission. In order to obtain this particular type of loan you must prove that you have had an income for the last two years by presenting bank statements, tax returns, or similar documentation. You are also required to divulge any debts to enable the calculation of a debt to income ratio to determine your eligibility for the loan.
- No Ratio Loans: This loan type is great for people that own more than one business. It doesn’t use a debt to income ratio to determine your eligibility, but the application process does require the disclosure of information pertaining to bank balances, property, business ownership, and stock and bonds.
- No Documentation Loans: Also known as no income/no asset verification loans, these loans require the least amount of paperwork. In order to qualify for this type of loan you just have to provide your name, social security number, credit score, and a down payment. Occasionally you may also be asked to divulge job details just to confirm your employment.
Other than the differences listed above, the three different no income verification home equity loan types are very similar. The amount of money you are allowed to borrow in each case will be determined by your home’s equity or the amount of money you have already paid against the value of your home, with the typical loan amounting to less than 75% of your equity value. Also, no income verification loans have higher interest rates than other types of loans and interest rates are highly dependent upon your credit score. Normally, the higher your credit score, the lower your interest rate.
When deciding whether no income verification home equity loans make the best loan options in your situation it is important to remember that, although they are easy to obtain, taking out such loans puts you in danger of losing your home through foreclosure if your monthly payments are not paid on time. Also, if you do decide to take out a no income verification home equity loan, it is important to consider multiple lenders to find the best interest rates and check the reputation of the lender you finally decide on. Finally, during the application process be honest about your income and debt amounts as well as your credit score, because not doing so will only hurt you in the long run.
Sources:
Home Equity Line of Credit No Income Verification. Information About Loans, 2011. Web. 5 Oct. 2011
<http://information-about-loans.com/line-of-credit/home-equity/home-equity-line-of-credit-no-income-verification.html>.
No Income Verification Loans. 2011. 5 Oct. 2011
<http://www.omniglot.com/onlineinfo/jlon/no_income_verification_loans.html>.
What Is Home Equity? wiseGEEK, 2003-2011. Web. 5 Oct. 2011 <http://www.wisegeek.com/what-is-
home-equity.htm>.
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