Reduced Documentation
Many banks also offer reduced documentation loans which allows a borrower to qualify for a mortgage without verifying items such as income or assets. Naturally these are higher risk loans and often come with higher interest rates. Because less documentation is provided on the capacity of the borrower, there is a high emphasis on the credit and collateral. To mitigate the risk of reduced documentation loans, lenders will often not lend to higher LTVs and limit the loans to smaller loan amounts, compared to loans that are fully documented.
Read more about this topic: Mortgage Underwriting In The United States
Famous quotes containing the word reduced:
“There surely is a being who presides over the universe; and who, with infinite wisdom and power, has reduced the jarring elements into just order and proportion. Let speculative reasoners dispute, how far this beneficent being extends his care, and whether he prolongs our existence beyond the grave, in order to bestow on virtue its just reward, and render it fully triumphant.”
—David Hume (1711–1776)