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.
