Where Have the Reduced Doc Refinance Mortgage Options Gone?
In prior years, many people either purchased or refinanced their home with some form of reduced documentation mortgage loans. The least restrictive refinance mortgage option was called the No-Doc loan. With a No Doc loan, you had to have a great credit score, but that was virtually the only qualifying factor for your home purchase or refinance. Then of course, there were the reduced doc loans such as no income and no asset verification, or no employment verification, and the very popular stated income mortgage loan options. These mortgage program types helped many people to finance their homes that could not technically qualify for fully document home loans. It also was a big reason why so many homeowners defaulted on their mortgages, ultimately causing the subprime mortgage meltdown, beginning in 2007.
The unfortunate part of this whole scenario is that refinance mortgage lenders had learned their lesson and began to do away with these reduced documentation home mortgage types. It’s unfortunate, because just as there were many borrowers that took advantage of reduced doc mortgages that really could not afford the loan payments, there were many others that used the programs responsibly and never have missed a payment. Now that home mortgage refinancing rates are at their all time lows, these “good” borrowers that need a reduced doc loan to qualify for a refinance mortgage are being left out in the cold.
Today, there are really no reduced doc refinance mortgage programs being offered on the market. The only real option for a refinance loan is to go fully documented. This will not help a good number of self-employed individuals that have heavy tax write-offs as most do, because income for refinance mortgage qualification is based on income after write-offs.
