If you haven't been living under a rock the past twenty years then you are probably aware of how important a good credit rating is. Your credit rating will determine your ability to get loan or credit approved. It is important to have a good rating to ensure that you don't suffer from any disadvantages when it comes to your financial life. A particular loan that looks carefully at your credit rating is low doc mortgage loans. These loans allow people with a good credit score to apply for loans without having to show all of the traditional documentation that is usually required for a loan.
No doc loans are very useful for people who have a difficult time gathering the paperwork together to prove their income. People who are self-employed often have an extremely hard time getting loans because they don't have any W-2s or pay stubs to show lenders. Low doc loans allow lenders to offer loans to people who have a good credit rating without worrying about proof of income.
Loan To Value Ratio Mortgage
Because these loans are considered riskier than traditional full documentation loans, many lenders have an increased interest rate for no documentation loans. You can expect to have a slightly higher loan rate because of the increased risk that lenders bear.
Another factor that lenders look at when considering these low doc mortgage loans is the borrower's debt to income ratio. A low debt to income ratio is a very good thing when you are applying for a loan. If your ratio is too high, then you should focus on trying to reduce your debts before applying for the loan.
Low Doc Mortgage Loans