Whats a no doc. loan ?
What are the specifics of this type of loan ?
Does it normally include higher interest ?
A no doc loan is a loan for people that do not have full time employment. Thats all I know.
A true no doc loan is just that… No income shown on the loan application and no Assets shown on the application. The Lender does not calculate debt to income on these deals they really just go off of your credit score and the loan to value. You can do a no doc loan up to as much as 100% with a good credit score but the rates are a little higher then if you put some money into the transaction. A No Doc loan on a non owner occ investment purchase at 100% ltv would be about 9% for the first mortgage and 13% for the second. But if you put 10% down, you could get a rate in the mid 7’s. See the difference. Higher risk for the bank…higher rate to the investor.
Good Luck to you and I hope this helps.
no doc is common for folks that can’t verify thier income. such as a new carreer, or a new business owner. most lenders want 2 yrs verifiable income. however if you have just changed careers or started a business, u most likely cannot give this info becuz uy don’t have it to give! so u can go no doc.
I’m not a lender but based on my personal experience as a borrower:
It’s also for people that don’t WANT to verify their income and assets. It usually involves a higher interest rate but if your credit is excellent it could be as little as 1/4 % above a full doc loan.
I just did a no doc refi where I had to provide two months bank statments and a letter from a client saying I did business with them for two or more years. THAT WAS IT! IT WAS GREAT! So I did two more loans after that.
Tip: When going no docs, don’t sign the IRS form (4506T) in the package that allows them to request your tax trranscripts from the gov’t. If I am paying higher interest for no doc, then THEY CAN’T HAVE THEM! ( i got no argument on all three loans)… the nerve of them, huh?
JeffInCT
Jeff in CT, You did not actually do a no doc loan. You gave them 2 months bank statements which shows your deposits and what is going out every month, the lender had a copy of your credit report and all of your debts were listed on your application that came from your credit report, so basically you did a stated income verified asset loan. The only thing you did not prove was your income. I am happy that you got a great loan that works for you however I wanted people to know the difference.
Ok, low docs.
If you put money down, will the rate be lover on your loan ?
An 80% ltv should be less than a 90 or 100% ltv