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:
““Write that down,” the King said to the jury, and the jury eagerly wrote down all three dates on their slates, and then added them up, and reduced the answer to shillings and pence.”
—Lewis Carroll [Charles Lutwidge Dodgson] (1832–1898)