subject: Getting A Low Doc Loan May Be the Perfect Financial Tool For You [print this page] Getting A Low Doc Loan May Be the Perfect Financial Tool For You
You don't have to be an expert in financial services to know that there are loans of all types and configurations available. That's because every single borrower is unique and has special needs. Take the case of someone who is self employed or gets paid primarily in cash. These people can have a tough time of it when it comes to securing a loan. That's because despite the fact that they may have very healthy income, they just don't have a good way to prove it.
Banks and other lending institutions generally want rock solid proof that you are able to pay back the money you borrow. But they are also very practical and know that sometimes it just isn't possible to present pay stubs or tax forms. Enter the low doc loan. A low doc loan is a type of borrowing tool that doesn't require borrowers to submit all the paperwork. Instead, the application process is streamlined and you can secure a low doc loan by preparing an affidavit that is essentially an oath you make to verify that your income meets specific criteria.
In situations where loc doc loans are more practical the lender is assuming additional risk. As a consequence they will require that you pay more. Most low doc loans carry much less favorable interest than to traditional loans. They are also likely to carry higher fees. They may present the borrower with limits on the amount they can borrow as well. For instance, a low doc loan for a mortgage will probably only cover 80% of the value of the property.
While it sounds like the cost of borrowing through a low doc loan makes them impractical, this is not necessarily the case. Despite the fact that low doc loans carry higher interest and fees than traditional loans, they can be an excellent way for someone who cannot document their income but has solid monthly income to borrow the money they need. As with all loans, it is much easier to secure a low doc loan if you have a very good credit history.
Even with the higher costs many borrowers find that a low doc loan is best for their financial situation. This is because the less stringent documentation requirements make they convenient and in some cases, necessary. You just want to be sure that you do your homework and find the specific loan that is right for your situation and make sure that you aren't paying more than you have to.
Because low doc loans are much more accessible than they once were, a quick Internet search will probably turn up a number of viable lenders in your general area. Or the search may find companies that do all their business over the web. Either way, you want to be sure that you read all the fine print and that you understand exactly what you are borrowing. In this regard, getting a low doc loan is no different than any other kind of borrowing. You should always make sure that you know what you are signing and what your obligations are.
