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Refinance Home Mortgage Loans - What are "No Doc" Loans?
by Carrie Reeder
If you are looking to refinance your current mortgage, there are several options available to you. Homeowners refinance their mortgage for many reasons. These include eliminating private mortgage insurance, receiving cash out at closing, obt

If you are looking to refinance your current mortgage, there are several options available to you. Homeowners refinance their mortgage for many reasons. These include eliminating private mortgage insurance, receiving cash out at closing, obtaining a fixed rate, and so forth. Refinancing a home loan involves getting a new mortgage. Thus, you are required to present the mortgage company with various documentations. However, if you prefer privacy, there are ways to obtain a loan with minimal documents.

No Doc Mortgage Refinance Loans vs. Low Document Refinance Loans

If you have good credit, you may be able to obtain a no doc refinance loan. Each lender is different. Some lenders are willing to grant a refinance with no documentations, whereas other lenders are not as eager to take a chance. The process of attaining a no doc loan is simple. With these loan applications, the homeowner provides their social security number and loan amount. The lender will base loan approval solely on credit scores. To obtain a no doc loan, you must have a very high credit score.

Low document loans are different from no document loans. With low document loans, the applicant is required to state income and employment history. In this situation, the applicant may supply recent paycheck stubs or income tax returns for the past two years. These loan programs are advantageous for self-employed or contract workers. Moreover, individuals who receive cash payments can get a low document refinance loan.

Benefits of No Document Refinance Loans

Obtaining a no document refinance loan is ideal for individuals who want to maintain their privacy. Some people are hesitant to offer lenders detail information about their employment, income, and finances. While lenders are not always thrilled to approve loans with little or no documentation, they reason that an applicant with an excellent credit history is less likely to tarnish their perfect record. Thus, they become an ideal candidate for a no doc loan.

Pitfalls of No Doc Refinance and Mortgage Loans

While no doc and low doc mortgage loans involve a speedier process, be prepared to pay a higher interest rate on your home loan. If privacy and speed is a main factor, a higher rate may not be a major drawback. However, if your primary reason for refinancing is to obtain a lower interest rate on your mortgage, a no doc refinance may not be the best option. Before refinancing, get a quote from a lender and compare the no document refinance rate with your current interest rate.

See my recommended Home Mortgage Refinance Lenders for the lowest rates online.

Carrie Reeder is the owner of ABC Loan Guide.

The site is not responsible for any content in it. E-mail: alldir[at]gmx[dot]com
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