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:
“The physicians say, they are not materialists; but they are:MSpirit is matter reduced to an extreme thinness: O so thin!—But the definition of spiritual should be, that which is its own evidence. What notions do they attach to love! what to religion! One would not willingly pronounce these words in their hearing, and give them the occasion to profane them.”
—Ralph Waldo Emerson (1803–1882)