No doc mortgages are often referred to as stated income loans. These mortgages allow individuals with good credit and sporadic income to qualify for a mortgage. Here is all you need to know about no doc mortgage loans.
No doc loans are intended for homeowners that have trouble documenting their income. If you have a good credit score and enough stated income to qualify for the loan, you can qualify for financing. You will pay a higher interest rate because the lender assumes more risk than with a traditional mortgage loan. If you are in a situation where you need to rely on this type of financing you will need to do your homework and shop for the best mortgage deal.
When applying for a no doc loan you will be required to document where your income is coming from. The lender will run your credit to access your FICO score. Most no doc lenders require a FICO score in the neighborhood of 680; however, as the market tightens you can find lenders willing to make concessions.
If you are self employed or work on a commission basis you could document your income by providing two years worth of bank statements or income tax returns.
As with any other purchase you make it pays to shop around for the best deal. Finding a loan with an interest rate .25 percent lower could save you thousands of dollars in interest payments. Always compare the total cost of the loan including all fees and prepayment penalties.
Remember to shop smart when looking for a lender. Do not allow mortgage lenders to access your credit until you are ready to apply. Too many credit inquiries in a short period of time can damage your FICO score. To learn more about avoiding common mortgage mistakes sign up for a free mortgage guidebook.
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Louie Latour is a mortgage professional and the owner of RefiAdvisor.com, a mortgage resource site offering a free gift for homeowners: "Mortgage Refinance - What You Need to Know." This guidebook helps homeowners avoid common mortgage mistakes and predatory lending practices.
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