Question:

When are there advantages to a no-income verification home equity loan?

Answer:

Advantages of no-income verification home equity loans are great for seasonal workers, the self-employed and commissioned people.

You can benefit from a no equity HEL or HELOC if you work on commission, or you are unwilling to declare your income. Your income might be from tips, or seasonal employment, or commissions, or you simply don't want to declare income and assets and are willing to take somewhat higher rate.

Also, with stated income home equity loans you and your partner could qualify for larger loan amount, if one of you has a larger income and the other - higher credit score. Even though it is not perfectly OK to declare the higher income of your partner because your FICO is 750 and his is 650, this is a widely spread practice with any stated income loans.

As long as your income exists and is stable, it is unlikely that any problems will arise.

However, if you are on regular paycheck and have been in the same business or with the same employer for two years, you don't really need a stated income 2nd mortgage/HEL/HELOC. Take advantage of the better rates you can have with full doc home equity installment loans.

Borrowers with high DTI ratio should not overstate income with reduced doc HELs and HELOCs.

Stated income and especially the No Ratio home equity loans can get you in trouble if you have high Debt-to-Income ratio. Brokers and loan officers will evaluate your DTI to determine the loan amount you qualify for. If your DTI exceeds the standard for their programs, you will be advised to take smaller amount.

Bear in mind that you are taking a risk with home equity loans when income is not verified. If you overstate your income, you really risk loan default.

Mortgage rates hit their lowest since 1955. Ask the home loan experts we recommend Quicken Loans how to take advantage of them.
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