Low Doc Loans Can Be A Great Tool For People With Good Credit

Borrowing money has always required a lot of paperwork

. Its understandable when you consider that the bank or other lending institution is turning over their money to you. But what about situations where you just dont have the type of documentation the bank wants? You may work primarily for cash. You might be a free lancer or self employed. Just because you dont have a regular company job and get regular pay stubs doesnt mean you wont need to take out a loan at some point. Fortunately the financial services industry has recognized this and to help people who just dont have the type of traditional paperwork they need they have created low doc loans.

Low doc loans work just like regular loans. You borrow a sum of money, pay interest, and make a monthly payment. The one big difference is that on low doc loans you are not required to provide the stacks of documentation that go along with traditional financing. That doesnt mean low doc loans wont require some type of forms, but you wont be burdened by the typical quantity of forms and paperwork.

Of course the convenience of low doc loans comes with a price tag. These types of loans normally require that you pay higher interest rates than you would pay on traditional financing and you may have to pay additional fees. The exact interest rates and cost will depend on the type of loan you are getting and the lending institution. You will need to shop around to make sure you are getting the best deal you can.

Despite the fact that low doc loans may have higher cost than loans that require the full battery of documentation, they can be a very good option for those borrowers who just wouldnt qualify under financing that needs a traditional pay stub or tax forms. In fact, they may be the only way someone with regular income that cannot be documented but who can afford the monthly payment may be able to get financing.

There are a variety of types of low doc loans available but the most common is a low doc mortgage loan. These are excellent financial tools for self-employed borrowers with good credit histories. Low doc loans for mortgages will normally only cover 80% of the value of the property you are financing. They may also require lenders mortgage insurance. This means you will need to have some cash on hand in order to be eligible. Never the less, low doc loans may be the perfect way for you to get the home financing you need.

Regardless of the lender you use or the type of low doc loans that you secure, you need to be sure to read the fine print. Of course, this is valuable advice for any financial transaction. With a mortgage loan you want to be doubly sure so that you dont run the risk of having big surprises at closing. With a little homework youll be able to get the loan you need without the rigorous paperwork requirements. Your good credit and your ability to pay your monthly obligations will be all that you need.

by: Dashiell Martin

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