This type of loans involves least amount of paperwork and does away with detailed income and asset verification. It is for those who wouldn’t be able to apply conventionally for loans. This amounting to high risk to the lender, thus the down payment is very high.Who apply for Reduced Documentation Loans?

• The self-employed
• Those who have difficulty documenting income
• Those who are involved in partnerships or corporations
• Those who had avoided purchasing a house due to the hassles of excessive and cumbersome documentation. They usually have good credit backing.
• A citizen of another country who does not have a social security number.

This type of loan comes in various forms. It is nothing but permutations and
combinations of options. They are:

• Stated Income .Verified Assets [SIVA]
• Verified income. Stated Assets [VISA]
• No Ratio i.e. No Income Verified Assets [NIVA]
• Verified Income No Assets [VINA]
• Stated Income Stated Assets [SISA]
• No Income No Assets [NINA]
• No Doc

Things to consider before opting for these:

• The terms used by different lenders may not conform to the same definition. So the details must be verified before opting any by name alone.
• The underwriting standards stay.
  For ex. If you want a loan for $5,000 and your income is only $3,000, without the underwriter’s “exception” the loan cannot be granted.
• Some lenders won’t take you by word of mouth and have to submit certified documents. So, get ready for those. After all in this type the risk of fraud is high. It is only a precautionary measure on the part of the lenders.
• The ‘No Doc’ is not absolute. There is some verification needed here too.

Today even those who have income and asset documentation opt for this type of loan. It saves precious time and throws paperwork out of the window .the only disadvantage is the high rates of interest. Further you are the best judge.
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