When it comes to personal and home loans, you can get easily overwhelmed because there are so many different options. Some choices for these loans are specifically designed for certain people. Personal and home no doc loans fall into this group. People who choose these loans often want to maintain a high level of privacy; they do not want all of their personal lives to be put under a microscope by financing companies.

What is a No Doc Loan?

A no doc loan, otherwise known as a no documentation loan, is a simple concept to understand. It means that you do not need to provide documentation to qualify for financing. You simply provide your Social Security number, name, and property details (for home loans). The lending company uses the stated income amount you provide and your credit score. All of the documentation you would provide to qualify for a normal loan, like income verification and references, are not required in this case.

Personal Loans

Personal no doc loans are one type of personal loan. In this loan, the lender does not have the same documentation that proves your employment and your income amount. If you have an off the books job, like a handyman, you would not have proof of your income. You could also own a small business and do not want your business profits counted as a means of repaying the loan.

High Risk Borrowers

Generally, a high risk borrower is someone with bad credit or an unstable employment history. No doc loans are good for high risk borrowers. Because you are not providing your employment history, you can qualify easier than another type of personal loan. Your exact level of risk depends on your employment history and your credit score. Your credit score, in particular, plays a large role in determining the interest rate that the loan will have.

Self-employed

Self-employment often means that you cannot always prove the income you make. To meet the requirements of a regular personal loan, you would have to prove all of your income. In many cases, this would mean that you would have to track down each and every customer within the time period needed and get written proof from them about what you charged.

Mortgage Loans

Mortgage lenders are demanding when it comes to applying for a loan to buy a home. With a typical mortgage application, your whole life is scrutinized and must be documented. Lenders do not typically advertise that no doc loans can be used to buy properties, but actually there are several types of these loans that can be used for obtaining a mortgage.

No income/No asset

This type of loan qualifies as a low doc loan. You will not need to provide income verification documents, but you will need to state the type of job that you have and how long you have been at your current place of employment. You will also need a property appraisal, the down payment for the loan, and a copy of your credit report. If you require a high level of privacy, this would be the type of no documentation loan that you should choose.

Out of all the types of no doc loans available, this one actually requires the least. There is a lot, however, that rides on your credit score. A better score means that you will need less documentation. Your employment length will also affect your approval; if you have been at the same job for a minimum of two years you should be fine.

Stated Income

Stated income no documentation loans for mortgages are ideal for a specific group. If you are self-employed or at least one third of your income is based on tips or commissions, you can state your income through a profit and loss sheet, bank statement, or tax return.  These are acceptable alternatives because your income is not consistently the same as it would be if you had employment with hourly or salary wages.

These no doc loans are generally tailored for people who make the income they state, but the amount that shows on tax returns is much lower. People often claim their exact income but tax deductions reduce this amount. The ending result is what appears as a lower income.

No-Ratio

A no-ratio no documentation loan is the ideal choice for people who have a substantial income and/or an excellent credit rating but want more privacy. Any assets you have such as savings, real estate, stocks, or investments can be used as an acceptable alternative to proof of income. Widow, widowers, or retired people benefit the most from this type of loan.

With these types of no doc loans, income is not stated at all. The other loans require you to provide a list of your debts so your debt to income ratio can be compared, but this loan does not do that. Credit scores are a huge factor. If you are credit worthy, you would qualify for this loan as long as you have a great history with making money.

Qualifications

Qualifying for a no documentation loan can be simple or difficult. There are a lot of factors that are considered. Most importantly, your credit needs to be excellent. Your credit report will provide lenders with a detailed history of your payments.

Your credit score should be between 620 and 660. The report should show at least five current accounts. If you have a previous foreclosure or bankruptcy, it has to be at least three years old and you must have reestablished positive credit. If you have any judgments, you must pay those before the loan can be closed.

No doc loans, despite their deceptive name, are not completely free from all documentation requirements. Minimally, you will need to provide proof of identity and your Social Security number. The type of no doc loan you choose will affect just what documentation you will need to provide. For many borrowers, it is worth having a higher interest rate in the end.

In the past couple of years mortgage lending industry has gone through some major changes.  You used to be able to walk into a bank and get a sub-prime mortgage loan with no money down.  Given the recent sub-prime mortgage meltdown, those days are over.  Lenders are less likely to give zero money down loans to people who have a bad credit rating.  One particular type of loan that suffered by the stricter lending criteria were no doc mortgage loans.

Just like the name suggests, no documentation loans meant that people didn’t need to prove their income in the loan application.  Because these loans were misused and abused by predatory lenders, they have been eliminated by a lot of lenders for the past couple of years.  Before the mortgage crisis occurred, some lenders were offering no doc loans to people with bad credit ratings.  This meant that the interest rates were extremely high and the borrowers eventually couldn’t continue to make the mortgage payments.  Low doc loans are just recently becoming more available by a growing number of lenders.

When it comes to low documentation loans lenders look at one major area- the borrower’s credit rating.  If your credit rating is bad then you probably shouldn’t apply for a no doc loan because most lenders will reject your loan application.  Low doc loans are designed to give people with a good credit score the ability to simply state their income in the mortgage application.  The higher the borrower’s credit score is, the less documentation that will be required for the low doc loan.

Low doc mortgage loans are perfect for people who are self-employed.  It is difficult to come up with all of the documentation for loans when you are self-employed.  No doc loans are designed to solve this problem by allowing borrower’s to state their income in the mortgage application.  Another ratio that is very important when applying for no doc mortgage loans is the debt to income ratio.  Lenders consider this ratio important in determining the borrower’s ability to repay the loan.

Because it is difficult to find no documentation mortgage lenders, you should start your search online. Using the internet you can look up different lenders that that offer no doc mortgage loans.  By getting comprehensive quotes from multiple lenders, you can ensure that you get the best interest rate possible for you mortgage loan.  Remember that saving a few interest points adds up to a lot of money when it comes to mortgages.

Given the recent recession that has occurred, it is not surprising that many industries have been affected.  One industry in particular that took a very good beating was the mortgage industry.  Due to bad lending practices, many people and businesses were affected home foreclosures and the tight credit market.  A particular type of loan that took a hit was no documentation loans.  A no doc loan allowed for the borrower to state their income in the mortgage application.  This meant that you didn’t need to provide any W-2s or pay stubs for the application.

Only in the past few month have lenders began offering no doc loans.  Unlike full documentation loans where the borrower is required to show W-2s or pay stubs to prove their income, these loans allow the borrower to state the income that they were making.  Because of this lack of documentation, these loans have earned a reputation as “liar loans” because many borrowers were over stating their income in the application.  Because of these recent facts, the lending criterion for stated income loans has been increased.  You can no longer be approved for a mortgage loan with a bad credit rating.

When lenders are looking at the loan applications, the one thing that lenders deem very important is the borrower’s credit rating.  If you have a good credit rating then there is a good chance that you can get the loan approved.  However, if you have a bad credit rating most lenders will not be willing to take the risk and give you a loan.  Because lenders bear a significant amount of risk when approving these loans, they want to make sure that the borrower is not going to default on the loan.  If the borrower has any previous history of late payments or defaults on the loan, they will most likely reject the no doc loan application.

Because these loans have only recently started to creep back into the lending market, many lenders are still hesitant in offering these loans.  People who are interested finding a no doc loan lender should go online.  There are many different stated income lenders that offer competitive interest rates on the loans.  If you are willing to look around you can find a good lender that offers a good interest rate on the loan.  Remember that should get at least 3 different quotes to ensure that you have the best interest rate for your loan.

Most traditional documented loans require the borrower to submit a whole host of different information.  You will be required to show your W-2s or pay stubs, tax return for a couple years, list all of your creditors and even disclose anything that could affect your finances.  The process of getting traditional loans approved is often very tedious.  If you are self-employed, proving your income can be very difficult at the best of times.  Fortunately for these people, no doc home loans are available.

Also known as stated income mortgage loans, these loans allow borrowers to state their income in the application process.  Like the name suggests, no doc loans mean that the borrower has to provide little documentation in order to get the loan approved.  You don’t need to worry about showing W-2s or pay stubs to lenders because they don’t require you to prove your income.  You will need to disclose your annual income which would include showing bank statements and tax returns for the past couple of years.

Other popular low doc loans include no income/no asset (NINA) loans.  Similar to the previous no-doc loan, these loans don’t require proof of income or proof of assets.  The higher your credit score is, the less documentation that you will need for the loan.  These loans are used for home purchases, home equity loans, and home equity line of credit (HELOC) loans.  When it comes to getting low doc loans approved, your credit rating is the most important piece of information that lenders look for when considering loan applications.  Borrowers with a poor credit rating should not expect to get loan approval for these loans.

Due to the recent sub-prime mortgage lending meltdown, many lenders will also take a close look at the borrower’s debt to income ratio.  The debt to income ratio is considered a measuring stick to a well you are positioned financially to repay your debt.  The higher the debt to income ratio, the less likely you’re to be able to continue making payments on your loans.  Most lenders won’t consider anyone who has a debt to income ratio over 45% when they are looking at mortgages.

Borrowers who are looking to get a no doc home loans approved should go online to look up the different lenders that are available.  Because the market for lending is very competitive, if you look around you can be sure to get a good interest rate on your loan.  These loans are very useful for people who have a difficult time trying to prove their income.

In today’s day and age your credit rating will affect many aspects of your life.  People who suffer from a poor credit rating will often feel the effects when they are applying for loans.  Lenders look at your credit rating as the likeliness that you will repay the loan.  On the flip side of things, having a good credit rating has many perks and advantages.  You can get lower interest rates, faster approval, and even better customer service.  One particular advantage that good credit ratings offer is the ability to get low doc loans.

Like the name suggest, a low doc loan requires you to show less documentation than traditional full documented loans.  Most traditional loans will require you to show your W-2s, tax returns, bank statements, pay stubs, list of your creditors and any legal documents relating to your financial life.  These loans are quite difficult to apply for because of all the information that is required for the loan.  With no doc loans, the better your credit rating is the less documentation that you will need to show for the loan.  This being said, lenders will still want to see your tax returns for the past couple of years and bank statements when you are applying for these loans.

The perfect candidates for low/no doc loans are people who are self-employed.  Most people who are self-employed have a difficult time applying for loans because of all the difficulty it can be proving their income.  Low doc loans allow people with a good credit history to get loan approval without going through the process of having to provide paper work to prove your income.  In the loan application you can simply state how much you are making.

Before the mortgage crisis, no doc loans were often offered to people with a bad credit rating.  This coupled with no down payment loans, led to many borrowers foreclosing on their home.  Fortunately lenders have since changed the criterion for the loan approval.  No longer will you get approval for these loans if you have a bad credit rating.

Besides credit rating, lenders also look at the borrower’s debt to income ratio when considering the loan applications.  The debt to income ratio is considered to be a good factor to determine whether or not someone can afford to repay their loans.  The higher the ratio is the worse off a person is financially.  If you are applying for low doc loans you should ensure that your debt to income is lower than 45% or it will be difficult to get the loan approved.

Due to the recent mortgage crisis, no documented loans have taken a major beating from the market.  Due to poor lending practices, many people were approved for no doc loans even though they weren’t qualified for the loan.  As a result, there were a large number of people that defaulted on their mortgage loans.  These loans have been labeled “liar loans” because borrowers tended to overstate their income in the lending application.  Only in the recent months are no doc loans once again becoming available to consumers.

Also known as stated income loans, no doc loans are typically used by people who are self-employed.  These people tend to have a traditionally difficult time getting loan applications approved because of loan income requirements.  Low doc loans were designed to help people with good credit to get their loan approved.  These loans are very useful for people who are looking to get a loan without the difficulties of having to prove their income.

Although lenders allow you to state your income, they do require other documentation to ensure that you aren’t overstating your income.  You need to have the past couple years worth of tax returns and also recent bank statements.  Lenders have increased the criterion for approving these low document loans because of the recent housing crisis that has occurred.  No longer can you simply walk into a bank and get a no doc loan approved.   You need to have a good credit rating when it comes to getting your loan approved.

If you are looking to apply for a no doc loan, you should be aware that lenders will critique your past credit history quite vigorously.  Any previous missed loan payments or default that you have will not go unnoticed by lenders who are offering these loans.  Because lenders that offer these stated income loans bear a greater risk when approving the loan, no doc loans usually have a higher interest rate than traditional loans.

When you are going to look for a no doc loan lender, you should use the internet to find the different lenders available that offer these loans.  Because these loans are not offered by every lender, you will need to look through a few different lenders before you find one that works for you.  Be sure to get comprehensive quotes from different lenders to ensure that you get the best interest rate on your loan.