What is a full documentation mortgage and why is it difficult to cover all the requirements?Answer:
Mortgage documentation requirements fall into several categories - full documentation, alternative documentation ( also called Limited Doc or Fast Forward), stated income, no ratio, stated income/stated assets, no income/no assets (NINA) and No Docs.
A full documentation mortgage will require that assets and income are disclosed to lender and fully verified. Additionally, it is required that borrower has had a consistent source of income for the last two years coming from the same employer, or if self-employed from the same type of business. This two-year requirement holds for the alternative documentation type, as well.
Borrowers fare best when providing full or alternative documentation. However, the 2 years requirement comes in the way for many that apply with full or alternative documentation. Yet, many borrowers are not aware there are other forms of documenting a mortgage and they should simply abide by the most restrictive one they can comply with. For example, the stated income documentation is the one a borrower should go after if they have changed jobs or got promoted in the last two years. Also, with this type of documentation only source but not the amount is verified.
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