Advantages and Disadvantages of No Doc Loans

The main advantage of no doc home loans is that you will maintain financial privacy and you will not waste time negotiating the interest rate. This is a plus for rich and busy people. The main disadvantage is that you won't be able to get a loan bigger than US$ 650 000. For someone who has a lot of money, this amount could be quite below their needs. A nice big house in Beverly Hills costs more than a million dollars! A secondary disadvantage is that you will pay a high interest rate for your loan. The interest rate could be as high as one percent above the average interest. In a 30 year fixed rate mortgage loan, that could mean a lot of money.

Still not sure? Consider it. Check your sources of income and compare a no doc mortgage loan with a standard mortgage loan. Maybe you will find that the difference is so high that it makes sense to present all those papers after all. Or maybe the money is insignificant to the amount of work required to convince the lender that you have an adequate income.

If you have done your homework and found that a no doc loan is perfect for you, go to three or four financial institutions and ask for the service. They may try to convince you that no-doc loans are not adequate for you, so be prepared and have a strong argument of why you want to use it. Do not misinterpret them, they do it because they want to protect their clients from a possible erroneous decision that could cost a lot of money. The last thing they want is a borrower accusing them of a bad advice. As it was mentioned before, no doc home loans are designed for a specific section of the market. Not everyone should use it.