Low Doc Loans and No Doc Loans
If you value your privacy, then you’ll find the mortgage application
process particularly distasteful.
Most mortgage lenders require you to provide full income verification. They’ll
want copies of your pay stubs, copies of your income tax returns and other
documentation before they give you a loan. In exchange for this lack of privacy,
you get the best possible interest rate for your loan.
Your alternative is to trade in the best rate in favor of some privacy by
applying for a low-documentation or no-documentation loan.
Low-doc loans were designed with several groups in mind:
- entrepreneurs; and
- people who cannot or choose not to reveal their income information.
If you opt for a low doc loan, you probably will have to come up with
a higher down payment, as well as pay a higher interest rate. Plus, you
will need to have a very good credit score.
No-doc loans require even less information. All you need to provide is:
- your name;
- your address;
- your Social Security number; and
- contact information for your employer, if you have one.
The lender then will pull your credit reports and decide whether to lend
you the money based solely on your credit history, the size of your down payment
and the value of the home you’re buying.
Low- and no-doc loans aren’t a way to get around credit ratings.
In fact, they usually require better credit than standard loans. So, they
aren’t for people who want to down-play low credit scores.
Next: Length of the
Loan |
