No Doc Mortgage Information
If you are looking to buy a home, one of the first things you need to do is to get your finances in order. The banks will want to see your earning statements, your bank statements, and they will be checking your credit score and credit report in order to determine your eligibility as well as what your interest rate will be if your application is accepted. If you are unable to produce the required documentation or if the documents you provide do not meet requirements set forth by the lender problems may arise. Or, you may be the type of person who doesn’t want others looking into their finances. If you find yourself in one of these situations you may want to consider a no doc mortgage.
People who are self-employed and people who earn their income from commissions may not have a very steady income which can be misleading in terms of their capability to make monthly payments on a loan. With a no doc mortgage, you do not have to disclose certain financial information. Keep in mind that depending on the lender you may be required to accept a credit check as well as provide other types of business related information not found in your bank or income statements.
The problem with no doc mortgages is that you will most likely have to pay a higher interest rate. You do get the benefits of financial privacy, so it definitely is a trade off and really depends on what matters most to you.
One type of no doc mortgage is a no ratio loan. These mortgages work great for someone who is living off income earned from investments they have made and depending on the market at the time their debt may appear to be higher than what is allowed. With this option you do not have to disclose your income and therefore the debt to income ratio is not a factor in determining your eligibility. This is a great for someone who just doesn’t have a normal job. However, like the other types of no doc mortgages, these types of loans come with a higher interest rate.
Brought to you by the guys over at Financial Planning Tips.
