Have you ever come across any ad claiming that they process your home loan at no time with no-document at all? Some might promise you that there is less documentation required for a home loan. Have you surprised about these? If you want to know about these things please go on read this article …
Providing necessary documents such as pay slips, financial reports, and tax returns is a time consuming and costlier for many self-employed people.
Secrecy of No-doc or Low doc Home Loans
You may think that how is this possible to give home loans without those documents? There is a catch in it. You have to pay high interest rate for these loans since the risk involved for the lender is high. These home loans are expensive when you compare this with the other types of loans due to the high-risk profile involved in this loan.
If you are purchasing a property for investment then this type of home loan may suit you. If you are going for refinancing an existing home and if there is no proper tax returns for your income then you can go for such Lo Doc home loans. There are different types of home loans that come under the Low Doc or No Doc home loan category. They are No Ratio loans, No Doc loans, and the Low Doc (State-Income) loans.
No Ratio Home Loans
The No Ratio loans may suit the people who are not ready to divide their income. Here the ratio indicates the debt to income ratio. This ratio is not considered in this type of loan since the person is not going to divide his income. Therefore lender need not worry about this ration when processing the home for such a person who applies for loan in this category.
However, good credit and a lot of assets are needed to compensate for not disclosing the income. The lender might consider these instead of the debt to income ratio. If you are afraid to organize the details of your income then you can easily go for his type of loan.
No-Doc Home Loans
There is another type of loan called the No Doc home loan. In this type of loan there is no additional documentation required. You will be required to furnish only the minimum required and the lender who gives you the loan would be processing your request with the minimal information that you have given.
The No document home loans are actually low document home loan where some documents like income proof are not required. Even in a no document home loan, you bought to simply fill out an income declaration formating their assets and income. This method is termed as self-verification.
Lo-doc Home Loans
These types of Low Document home loans are for the self-employed, investors, and independent contractors. People who are bankrupt or have an impaired credit rating are the right candidates for this type of Low Document home loans.
In this type of loan you dislose very little information and hence maximum privacy is there. You may be required to distribute your earnings for two years as a whole and this also depends on the lender who you approach for the loan. Bank statements and tax returns may be required when you apply for this loan.
Having known the different types of low doc loans you can approach an expert on this line to get more details on this loan. Keep in mind that nothing comes for free and because you may end up with higher interest rates in this type of loan. The challenge is to choose the top home loan with the top features for your particular circumstances.