What you should know about no doc mortgage loans

If you are struggling to find a traditional mortgage loan because you cannot document enough of your income to qualify, you could benefit from a no doc mortgage loan. Here is what you need to know about this unconventional type of no credit check refinance loan.

Traditional financial lenders require documentation of income when applying for a loan. This documentation usually comes in the form of pay stubs from your employer and bank statements showing what your assets look like. Documenting income is difficult for some individuals who or self employed or are paid on a commission basis; these individuals could benefit from no doc refinancing loans.

No doc mortgage loans tend to be different from typical mortgages in that they require much less documentation of income and assets to qualify. The financial lender takes on a higher risk in lending; this risk is passed on to the borrower in the form of higher interest rates and lender fees. The no doc mortgage loan financial lender may require a higher down payment or points paid to qualify for this loan.

Income no doc mortgage loans do not require information about your income, assets, or employment status. The financial lender will instead rely on your credit score and the appraised value of your home in order to make a decision on your no credit check refinance loan application. If your application is approved you can expect your interest rate to be as much as a few percent higher. These loans are ideal for individuals with superb credit.

Ratio no doc mortgage loans do not require you to state your income; because of this the lender does not look at your debt to income ratio. The financial lender will instead require some documentation of your assets, debts, and employment status in order to approve this no doc refinancing loan. The interest rate you receive for a ratio no doc mortgage loan is higher than a typical mortgage, but not as high as a income loan.

Stated income no doc mortgage loans enable you to declare your income first without having to provide any documentation. The only requisite for this loan is that you able to document your employment history and state a reasonable income for the type of work you do.

The financial lender will use your assets and debt-to-income ratio in order to qualify you for the no doc refinancing loan; because of this the interest rate you can expect to pay is typically only half of point higher than a usual refinance. You are going to have to have excellent credit and a fairly large down payment or up front points to qualify. This type of no doc mortgage loan is also going to be ideal for the self-employed.

Author Bio:
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