No Doc Home Mortgage Refinancing….A Brief Overview
What is no doc mortgage refinance?
A financial solution which does not require a borrower to undergo any process for monthly income, credit or asset verification for the purpose of refinancing existing mortgage is called a no doc home refinance. But these days most of the lenders have stopped offering such loans that were extremely popular until a few years ago. Typically, these types of mortgage refinances used to be best suited for individuals who were either retired or self-employed. The main advantage of getting a refinance home loan with less or no documentation is that the information related to person’s finances is protected. Nevertheless, the rates of interests provided used to vary according to the level of credit rating of the applicant and if someone had a bad credit, obtaining an approval was really difficult if not impossible. Still it could be better if you had some proper knowledge of the various forms in which such loans used to be accessed.
No or low doc mortgage refinance types
Home refinance loans that involve little or no paperwork could be broadly categorized into 3 types. These are:
- Stated income loans: in which only few documents like profit and loss statement, annual income tax return or bank statements have to be furnished by applicants. Such kinds of financial solutions could be most apt for borrowers who are self-employed and earn money through tips or commissions.
- No ratio loans in which credits could be secured by providing proof for owning assets, business or real estate investments, money invested in banks, bonds or stocks, etc. The kind of loans could be ideal for property owners who have huge monthly or annual income as well as excellent credit reputation.
- No income or asset verification loans in which borrowers just need to provide some information on their credit profiles, appraised home values or the amount of down payment that can be paid. Besides, some lenders may also demand details of source of employment and its length. Such a proposition could be best for people who want total financial privacy.
How to get mortgage refinance with no doc?
It was always hard to get qualified for a refinancing home loan with no documentation especially if your credit score is bad. However, even if some applications were to be considered by some lender, certain documents had to be kept ready for submission. These may include statements pertaining to applicant’s monthly income, level of credit or duration of employment and its stability. Few mortgage servicers do still offer such loans but outcome of any such application made will depend on an individual’s personal financial and credit. In any case, it could be advisable if you take the below mentioned aspects into consideration when thinking of applying for a no or low doc refinance loan. This will not just enable you to improve your chances of getting approved for a no doc mortgage refinance loan but also help you to qualify for interest rates that are fair for your kind of financial as well as credit circumstances.
3 important guidelines
- It is suggested to work upon improving your credit by taking steps for reducing your secured or unsecured monthly debt payments as it will help to win lender’s confidence. Lenders may consider your case if you have a good credit.
- One must always provide correct, accurate and verifiable information in the application form so that it becomes easy for lenders to review applications and process them faster. This will also enhance chances of getting approvals.
- Start saving some money well in advance prior to determining your eligibility for a no doc home refinancing. Most of the lenders will want applicants to pay a substantial amount of down payment.
Qualifying for stated income, no ratio or no income verification mortgage refinance loan can be challenging if you have a developed a bad credit and have very less equity in your property. Hence, it is recommended that you seek assistance from a competent mortgage professional when you are out to explore your home refinancing options. There will be many other alternatives which will be available for reducing monthly mortgage payments or drawing cash when most urgently required. Seeking guidance from an expert could help you to arrive at the right decision for your situation and even get assisted to prepare the necessary paperwork which is of vital importance for getting an approval from lenders.