Other Loan Types & Mortgages
There are many loan types, programs and mortgage products to choose from. However, if unable to meet the specific underwriting requirements for traditional mortgage programs, there could still be a few solutions available. Often times, some of the below mortgage products are referred to alternative documentation loans and they can include the following:
Some of the programs below may not be available in your area.
No Asset – For the life of the loan, the borrower does not provide or state any assets.
No Income – No income is stated or documented for the life of the loan.
Stated Assets – Assets are stated for the life of the loan, but never verified or documented.
Stated Income – Income is stated for the life of the loan, but never verified or documented.
Interest Only Loans
An interest only loan can be used to keep monthly payments lower than with a traditional 30-year fixed-rate mortgage and can be a great option for a first time homebuyer. Typically, the term is the same (30 years), but the monthly payment is applied only to the interest part of the loan, not the principle, which is why the payments are less. With an interest only mortgage or loan, no payments are made toward the principle.
Piggyback loans are usually composed of a first mortgage and a second mortgage (the piggyback). For instance, the first mortgage may be 80% and the piggyback or second mortgage could be 10% or even 15% (80/10, 80/15). It seems more complicated having two mortgages, but the ability to save money can be possible by not having to pay private mortgage insurance. Also, both loans are closed at the same time, making the closing costs associated with the second loan or piggyback loan minimal.
Construction to Permanent Loans
Also known as the all-in-one, rollover, and one time close, the construction to permanent loan is used when purchasing and building a new home. During the construction phase, an interest only loan can be used and upon project completion, the second loan mortgage, more comparable to a fixed-rate mortgage is used for the permanent mortgage on the new home. Both the home construction loan and the permanent mortgage loan are closed at the same time.
The non-prime mortgage is used for borrowers that are not considered prime, meaning credit scores are typically lower, job history is not stable, etc., and where qualification for a traditional mortgage is hard to approve.