If you are considering getting a new home or buying one, then you must have already searched for homes having low mortgage and interest rates. It is easy to apply for such mortgages if you have all the required documents and qualifications, most significantly a good or excellent credit score.
However, in reality there are lots of aspiring home owners who don’t have enough documents or either they have poor or bad credit scores, or they don’t have a credit history at all. For these people, the most ideal thing to do is to look for no credit check mortgages.
There are various no credit check mortgages in the market today. However, the most renowned is the streamline mortgage. Streamline mortgages are refinances of existing, insured mortgages-usually through the Federal Housing Administration (FHA) or the Veteran’s Administration (VA). This type of loan is “streamlined” and requires less paperwork and fewer procedures to complete the refinancing.
Conditions for the Loan:
- Borrower should have a good standing FHA or VA loan for at least 12 months
- Main purpose should be reducing the borrower’s rate and payment
- No cash may be withdrawn as part of the refinancing of the mortgage
Benefits of Streamline Mortgage:
- No credit check is required but the loan payment history is checked
- No appraisals
- No income or employment information is needed
Restrictions of the Loan:
- In order to avail of “no-appraisal refinances”, it is required that the loan should not exceed the original loan amount
- You can only use the no-appraisal process to refinance investment property
- Borrower should be on active-duty or a prior service veteran if using the VA streamline loan
Risks of Streamlining
- Since there’s no credit check whether the borrower is in debt, the borrower is expected to pay the standard monthly mortgage rate.
- “No-cost” refinancing, over time, pay well more in interest rather than paying the closing costs and transaction fees up front.