Alternative Documentation
When you get a loan, you have to prove you have the means to pay it back eventually. Basically, you need to show the bank that you're not a likely deadbeat.
You can perform this feat by providing income tax returns. These records show how much money you brought in during a given year, and your banker can then figure out whether you represent a safe investment. However, sometimes tax returns don't tell the full story.
If for whatever reason, tax returns don't give the best picture of your annual earnings potential, the banker might turn to so-called alternative documentation.
This sounds like some underground paperwork stored in the shadowy recesses of the dark web. Don't worry, it's not really that weird. Instead of income tax returns, the alternative docs in question include things like W-2s, pay stubs and bank statements.
Related or Semi-related Video
Finance: What is Investment Grade?2 Views
Finance allah shmoop what is investment grade Whoa whoa Really
steve Not not investment grade No Oh alright much better
This is investment grade Aren't enough of that Think about
the quality of investment in a bond as relating tow
How slippery the slope is on which investors are driving
their investment returns when you get way Steep like here
in the rocky mountains Well that's the land of c
and d rated bonds And you make a lot of
vertical progress As long as things don't go Ah arai
like vertical progress Like you get very high interest rates
for taking a lot of risk that these bonds go
bankrupt They're not investment grade so yeah And things go
awry Well you look like that guy All right So
here's the map for grades of bonds brought to you
courtesy of the kindly loving people at moody's and s
and p rating services And you can see the block
investment grade there from the three triple d minus there
on up Well all of these are investment grade Meaning
that at least historically the odds of any of these
bonds going bad I e they stopped paying interest payments
And investors don't collect well The odds of them failing
are very low The whole notion of being investment grade
means that the odds of getting your investment in the
bond back plus all the interest payments are really high
Their grade is for investors And with that certainty comes
thie quote penalty unquote of lower interest rates or investment
returns Because presumably in buying investment grade paper investors have
taken last risk so they get less reward right Yeah
and you know for those who eat risk for breakfast
you know the sky's the limit and not always in 00:01:56.657 --> [endTime] a good way No
Up Next
What is a 1099? A 1099 is a tax form that comes from an employer. It states how much income an employee has made and the employee is able to use th...
Inter-vivos translates to "between the living." It's an estate-planning vehicle that allows a trustor to transfer assets to trustees.
What is the loan-to-value ratio? Loan us some of your time and watch this handy video.
A payday loan is a loan using the promise of delivery of cash on your payday check as collateral. Disappointingly, it has nothing to do with the ca...