Home mortgage brokers are constantly trying to capture a larger share of the lending market for themselves by designing new products to attract new borrowers. This is a great benefit for borrowers looking to find a mortgage tailored to their specific needs. By stepping outside of traditional, mainstream lending programs, brokers are consistently scoring new customers and borrowers are getting their funds quicker and easier.
"No Doc" and "Super Jumbo" loans are new products that premiered not to long ago and are drawing a lot of attention.
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Do "No Doc" Loans Require Documentation?
No Doc loan stands for No Documentation Loan. That's right. The true no doc loan allows a borrower to secure a loan without having to declare income, assets, employment history or show tax returns. The lender doesn't base his decisions on your personal financial information and the only requirement is that you have a mid-level 600 credit score. No doc loans are quicker to fund because the paper work has been eliminated. No doc loans are also available with Interest Only and 0 down-payment options.
So, what's the down side? The obvious one is that a No Doc loan will usually have a higher interest rate. Some borrowers are happy to overlook higher rates because this loan takes less time and requires the least amount of documentation. The lender checks your credit score and evaluates your intended purchase and that's it. Some lenders even advertise a 24 hour turn around time for approval and funding.
Borrowers who want their privacy on don't want to be put through a tedious loan application process will opt for the no doc loans. Those not having a regular income, or perhaps living from an inheritance or an income from business partnership, will also find no doc loans attractive.
There are modifications to the no doc loan that offer lower interest rates but do require some documentation. An example of this is the Stated-Income (Low Doc) Loan, useful for borrowers who don't have regular pay checks but derive income from fluctuating commissions. No Ratio loans are attractive to borrowers who have good credit and assets but don't want to disclose income, making it impossible for the broker to evaluate a debt-to-income ratio.
Do You Need a "Super Jumbo" Loan?
If you're looking at property in a high-end neighbor or have your heart set on a mansion style home, the Super Jumbo loan may be for you. Super Jumbos are usually used for high dollar property financing. Some lenders put a cap of $650,000 on a Super Jumbo loan while others will finance for as high as $20 million. These loans are always high interest because the lender is taking much more of a risk. They are also available in conjunction with other options such as No Doc, Low Doc and Interest only loans.
Another benefit of a Super Jumbo loan is that you can over fund your purchase. Lenders found success with 100% financing and took the next step. With a Super Jumbo loan you can get even more funding - 125%, 150% or sometimes even more. As an example, if you purchased a property for $600,000 funded by a Super Jumbo Loan at 120%, the amount of cash you are actually borrowing is $720,000. The borrower is free to spend the additional money to pay off other debts, start a business or pay for college, make new purchases and, etc.
If you manage your money well and can afford your mortgage payments, the Super Jumbo loan is a good product for you. During a thriving economy and booming real estate market, the ability to purchase new property that will appreciate quickly and produce a profit is essential. But, keep in mind that your will have to make those mortgage payments even if you lose your job or the economy creeps to a halt.
As you can see, new loan products are giving borrowers new opportunities to fund their dreams. By doing your homework and exploring your options you are sure to find the loan that's best for you.
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