Unconventional loans are making a comeback, allowing borrowers with undocumented income streams to achieve their dreams of homeownership. While there are many benefits brought around by this trend, it’s also important to consider the potential risks before determining if this method is the right fit for you.
It’s no surprise that applying for a mortgage typically involves a lot of paperwork. Namely, mortgage underwriters need to see a well-documented financial history — including pay stubs and tax forms — to verify a steady stream of income. Or at least, that’s how it’s always been in the past.
Unconventional mortgages provide alternatives for those who don’t meet the standard income documentation requirements. For example, many software engineers contract their work, and while engineers who have been contracting for several years can easily document their income using tax returns, those early in their careers may lack the evidence of a steady income that is often required when trying to obtain a loan. Similarly, entrepreneurs can benefit from unconventional mortgage offerings, as self-employed folks often face challenges getting loans due to high risk of business failure.
Simply put, for those unable to provide employer pay stubs or a lengthy financial paper trail, unconventional mortgages allow individuals to simply provide alternative methods of verifying cash flow or assets requisite to getting a loan approved.
A History Of Unconventional Mortgage Loans
Unconventional loans have come with their share of criticism. Many experts believe they exacerbated the housing crisis worldloans.online/payday-loans/ hours of 2007 and 2008. And yet, with demand for homeownership on the rise — and with more and more Americans working nontraditional jobs — these loans are back in a big way. (mehr …)