No Doc Loans

No doc is short for no documentation. No doc loans require no documentation from the borrower in order to be approved. The borrower will need to provide their name, Social Security number and if you are applying for a mortgage loan, property details. Unlike other loans, the borrower does not have to provide verification of income and other references. This is a unique type of loan many people don’t even know about. Those who apply for no doc loans are usually people who want to protect their private details. There are different categories under which these loans can be classified.

One category of classification is the personal no doc loan. Personal loans are used for any purpose the borrower wants. A no doc loan is one where the lender does not acquire income or employment verification. An example of a borrower who may want this type of loan is a small business owner who does not want the profits from their business taken into consideration regarding loan repayment and income. Self employed individuals are also good candidates for no doc personal loans because it is sometimes difficult to prove self employment income.

There are even no doc mortgage loans, but they are very uncommon. In order to qualify for a no doc mortgage loan, your credit would need to be excellent and it would most likely be difficult to find a lender. Yet another one of the different no doc loans available is the no income or no asset loan. For this type of loan, you will need to state your employment and length you have been at your job, however you will not be required to provide documentation of employment or income.

No doc loans aren’t the easiest type of loan to qualify for. In order to qualify for any of the different types of no doc loans, you will need to have excellent credit. This is usually considered any score over 620. And, because these are high risk loans, the interest rates are going to be higher than they would for other types of loans where documentation is required.

How do you know if a no doc loan is right for you? First, you must understand the difficulty of acquiring such a loan and the high interest rates associated with it. If you feel that your reasons for wanting this type of loan outweigh the negatives, speak with a loan officer or financial advisor. A financial advisor may be your best bet as a starting point, as they can counsel you on no doc and other types of loans and help you find the best solution for your needs.

There are many other types of loans for personal and business purposes. And, if you currently own residential or commercial property, there may be lines of equity available. These are alternatives to no doc loans that should be considered because the overall amount paid would be lower, if only because of the lower interest rates. Interest rates on a large loan can make a big difference when calculated over time.

Like any type of large financial transaction, no doc loans should be scrutinized against your financial needs and goals before deciding if they are the best choice. For some, the no doc loan is ideal, for others, there are better alternatives. You can start by looking over your own financial records and making a list of your goals and what you hope to achieve with a loan. This will help you make a more educated decision when you are ready to apply for any type of loan.