Residential Mortgage Application: Considering No Doc Loans

When you are filling out a residential mortgage application, you may be able to get involved with a no doc loan. Here are a few things to consider about choosing a no doc loan.

No Doc Loan

A no doc loan is one in which you do not have to provide any documentation as to how much money you make or what types of assets you have. This type of loan can be very beneficial if you have trouble documenting your income. Many people that are self-employed like to get this type of loan because they are paid irregularly.

Interest Rate

When you agree to a no doc loan, you are also going to have to agree to a higher interest rate in most cases. Lenders have to charge more for interest on this type of loan because they are taking on additional risk. Since the lender cannot verify how much money you make or how much you have in savings, this is a much riskier proposition for them. Because of the additional risk that they are taking on, they are going to also have to charge you a higher rate of interest to compensate for it.