What is a NINA (nee-na) No Income No Asset Mortgage?

We have been getting many inquiries about this type loan, which has prompted this article.

No Income No assets Mortgages have basically three requirements.

Credit scores of a minimum of 680
2-6 months reserves depending on Loan to value
Owner-occupied

There are many other variables that we will not be able to cover in this e-zine article. But we will cover the basics.

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The second requirement is adequate reserves. Which are 2-6 months mortgage payments left in any account after closing. These reserves are considered emergency funds in case your income stops for any reason. This way, you have 6 months to get your financial affairs in order while still being able to make your mortgage payments. The reserves are free to be spent the day after closing, but is it a wise thing to do?

How Much Money Will This Cost me?

Since this is no asset verification these funds do not have to be seasoned. Which means the source of the reserves are not verified. Also, if the transaction is structured wisely this is another excellent way to buy property with NO MONEY DOWN! Or better yet NO CASH OUT OF POCKET! We will include this strategy in another upcoming e-zine article in the future. So bookmark this site!

If you are considering purchasing a home, the source of your down payment, closing cost and prepaid are not verified if you choose the no asset option. Also, You can verify your assets if that is not an issue and apply for a "no income verification" mortgage only. This is important because if you can verify your assets you receive a slightly lower interest rate.

The No Asset No Income loan offers a “No Job” feature with no income disclosed or you can just state your income on the application. If you decide just to state your income, it is not verified. The differences in these types of variables are directly related to risk which will be reflected in your interest rate. For example, "No Job" is considered a slightly higher risk than "Stated Income" therefore you would receive a slightly higher interest rate for a No Job product.

Should You Avoid Signing The 4506 And The 8821?

Its probably best that you decide whether you want to sign these documents or not. Some lenders require you to sign these forms if you want the loan. One form is called the 8821 and the other is a 4506. In a nutshell they authorize the lender to request your original tax returns directly from the IRS. Rateseekers.com offer mortgage products where Lenders do not require you to sign these forms.

Why Should You Consider a NINA?

There are many reasons why we would recommend a No Income No Asset loan. We have found that they work best with the Self Employed Borrower simply because of tax return issues that a small business owner contends with. Most small to medium sized businesses have many expenses and valid tax deductions/advantages that they claim on their tax returns- which help tremendously in reducing the amount of taxes paid to the IRS. The problem is that after all the deduction for expenses etc. the business is left with a very low adjusted gross income.

For example we recently reviewed the tax returns of a small business generating 75,000 annually in gross revenues. After all the regular deductions for general business expenses, auto mileage, travel etc. the company showed an adjusted gross of 25,000. When a underwriter views these tax returns these deductions are considered REOCCURRING business expenses. Therefore the true annual adjusted gross income of that business is 25,000.

This will probably get you qualified for a loan amount of 65,000. As you can see for self employed individuals it's a double-edged sword. The tax advantages/deductions that a small/medium business receives/claims can be its demise when trying to verify adequate income for the repayment of a mortgage.

So, What Are The Drawbacks?

Please understand the benefits but at the same time the drawbacks. The most obvious is interest rate. You can expect interest rates to be approximately 1.5% higher than market rates. Remember these types loans are specialty type loans.

Nina's or like type products will become more in demand with years to come in our opinion. This generation has been captured with the “buy now pay later” scheme. This, compounded with the availability of credit cards has created high debt loads for many Americans. This is another reason why No income No asset Loans are attractive because debt to income ratios are not calculated. Quite frankly most credit reports we see carry high debt loads.

This is a niche product and RATEseekers.com specializes in Niche type mortgages. We have been offering them from day one. We have built long-lasting relationships with these specialty wholesale lenders directly, so you won’t have to go through multiple middleman mortgage companies to access these products.

Can We Get A Good Interest Rate?

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One last thing if you are concerned about interest rate. Please don’t get caught up in the rate-shopping craze. It is so irrelevant when considering this type of program. Moreover, focus on the fact that you are able to purchase a property that you may not have been able to buy with conventional financing. And remember that Real Estate is a tangible appreciating asset (not like a car). Most people only live in a property for 3-5 years and then move on so the illusion of having that interest rate for thirty years is not statistically accurate. The equity build up, appreciation and tax benefits you can enjoy from home ownership simply out weighs the drawback of a slightly higher interest rate. Bottom line is, if you work out the numbers, you will see that you will be making money not losing it.

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