What Ever Happened to the Low Doc Mortgage
Did the Low Doc Mortgage Go the Way of the Dinosaurs?
Go ahead and ask your average lender about a low doc mortgage. You'll get a variety of responses. Some laugh, others smirk and there are yet others who will reminisce about the days when mortgages were much easier to approve and low doc loans weren't just wishful thinking. Is it true? Has mortgage lending gone back to the stone ages? Here's what you need to know...
Caution is the Trend
Ever since the crash of the financial sector, lenders have become increasingly discriminatory when it comes to their underwriting guidelines. After all, it was shady lending that put the economy in the predicament that it's in. No one wants to be caught writing questionable loans nowadays.
That being said, there are still a few lenders out there who will do low doc and no doc mortgages, but you're going to pay a sub-prime interest rate for them. This means a monthly mortgage payment that is much higher than what you would see with a traditional mortgage loan.
Things to Consider
If you're thinking of getting a low doc mortgage, ask yourself why. Your lender might actually be able to approve you for a full doc loan with a lower interest rate. If you don't have pay stubs, income tax returns can work just as well. Talk to your lender about what documents you actually need before assuming you won't qualify for a full doc mortgage. You may be surprised at what you actually qualify for.
Your best bet is to talk to your lender about all of your mortgage options and see if you can qualify for a full doc loan first. If that doesn't work, then a low doc loan may indeed be the right answer. Just be prepared to pay more for it, even if you have perfect credit.