For those who want a home loan, but wish to keep financial information private, a no doc mortgage may be available.  These mortgages require little paperwork for a loan application.  They may require no information on employment, salary or supplying information on outstanding debts.  While the application process for these loans makes them incredibly attractive, a no doc mortgage loan is often available only to those with the highest credit scores and may offer higher interest rates than loans with a more extensive application process.  There are three basic types of no doc or low doc loans available.  Before deciding which type of loan is right for you, familiarize yourself with the pros and cons of each.

Most people who apply for low or no doc loans are those who own their own businesses, employees who do not draw a regular salary such as those on commission or people who work for tips, or freelancers.  The application of these loans is different in that salary is often self reported and there is no need to supply documentation of income.  Because these loans may be riskier for lenders, no doc mortgage loans are usually offered to people with the highest possible credit scores.  If a borrower has any late or missed payments, too much outstanding debt or any balances that have been settled, the application will probably be denied.

No ratio loans are one option available for those who do not wish to disclose income.  “No ratio” refers to the fact that the amount that may be borrowed is not calculated based on the borrower’s income.  Once again, this loan requires great credit and a large bank account.  During the application process, an applicant will outline the full scope of their assets to show financial stability and give credence to their ability to repay a loan.

Stated income, or low doc, loans do require documentation, but not to the same degree that a traditional loan would.  For this type, a borrower who works on a commission or freelances provide potential lenders with two years of payment history or bank statements to provide an estimate of future earnings.  As the level of income is not assured, be prepared to supply a larger down payment than a traditional loan would require.

True no doc loans are hard to come by.  The application is by far the simplest, often requiring nothing more than a social security number and information on the homes appraised value.  The lender will examine a borrower’s credit report, and those who have never missed a payment and have no other negative marks may be eligible with no further information.  Even though there is no paperwork required of the borrower, it may be in your best interest to check your credit report before applying to make sure a history warrants this type of loan.

Great credit history opens the door to more than just a no doc mortgage.  Qualified applicants may also look into no doc refinance loans and no doc home equity loans.  These will speed the application process and keep financial information as private as possible.

Bad credit mortgage loans are available to people with poor credit.  This article contains an interview with a bad credit mortgage loan expert.  If you find yourself in a situation where you have the option of losing your home or refinancing, but you have bad credit, then you should continue reading.  By the end of this article you should be well on your way to a better understanding of obtaining a mortgage loan for people with bad credit. We have interviewed Gerri White, a mortgage loan expert to help answer some common questions:

LDC: Thank you for speaking with me today.  I know there are a lot of people out there that are concerned about the interest rates they are paying on their homes and want to refinance but believe they cannot due to bad credit.

GW: Not a problem.  I am happy to talk about bad credit mortgage loans.  It is important to let people out there know that they have options.

LDC: What is a bad credit home mortgage loan?

GW: Well, a bad credit mortgage loan is a loan that is granted to a person who wishes to buy a home or refinance their existing home loan for various reasons.

LDC: What are some of the reasons that people wish to obtain a bad credit loan?

GW: The first and foremost reason someone wants a bad credit loans is because they wish to purchase something, be it a home or auto, but they have bad credit.  Many people assume that if their credit is poor then they will never be approved for any loan and that is simply not true.  To tell you the truth, lenders love people with credit scores from 580-619 because they can charge them the higher interest rates for the riskier loan.

LDC: So if you obtain a bad credit loan you can expect to pay higher interest rates?

GW:  Yes.  Simply put, you are seen as a risk to the lender so in order to make it worth their while, they are going to charge you higher interest rates.  But, if you really need a home or a car, then many people have no other choice but to deal with the high interest rates and higher monthly payments.

LDC: Doesn’t it stand to reason that people with bad credit already have a hard time paying their monthly payments and wouldn’t be able to afford a high interest payment?

GW: There are many different reasons that people have bad credit.  Some people are in a situation where they had some financial burdens that overwhelmed them at one point, but they are not on track to a better credit history, but that just hasn’t caught up with them yet.  In the meantime, while they wait for their credit score to rise, they find themselves in need of purchasing something new.  These people can handle the payment and for now decide to do so knowing that in the future they can refinance for a lower rate.

LDC: What is your advice for people looking into a bad credit mortgage refinance loan?

GW: My advice would be to wait until you can improve your credit history before considering refinancing with a bad credit refinance.  You can improve your credit in as little as four to six months by making your monthly payments on time an fixing any errors on your credit report.

LDC: Thank you Gerri for the information you provided us with today regarding bad credit mortgage loans, I am sure many people appreciate it.  This should help a lot of people understand what is possible and the steps they need to take in order to obtain one.

If you have bad credit and are looking to buy a house then bad credit mortgages are an option for you. These particular types of mortgages are particularly geared for those who have less than stellar credit.  People with bad credit are not necessary barred from owning a home merely because of their poor credit. Many times a person with bad credit will be required to either pay additional money down or will in most cases pay more a month for the mortgage because of a higher interest rate. Owning a home is possible even with bad credit. Knowing the ins and outs of obtaining a bad credit mortgage is necessary to ensure that you are well-informed about the process.

Mortgages for bad credit home buyers are available, but there are stipulations that must be recognized before agreeing to such a mortgage. Whenever dealing with a person with bad credit a company always takes a larger amount of risk than with a person with good credit. There is always the possibility that the person will not pay their mortgage in a timely manner and that the house could be placed into foreclosure. Given that foreclosure is very costly for both the homeowner and the lender, higher interest rates and more stringent terms are placed on a bad credit home mortgage.

When seeking a mortgage with less than perfect credit it is advisable to shop around for bad credit mortgage lenders. These particular types of mortgage lenders specialize in providing those with bad credit with the opportunity to own a home. As stated before the terms for such a mortgage are more than likely stringent. The home buyer will most likely have to agree to higher interest rates, a longer term for payoff of the home and other terms such as paying the mortgage by a certain time. Always do thorough research on any lender that you are considering, particularly when seeking a bad credit mortgage. There are many companies that claim that they can assist you but are actually fraudulent. If possible ask a local realtor for assistance with locating a lender that assists those with bad credit in obtaining the financing to purchase a home.

The best keys to purchasing a home with bad credit are to be realistic and to be prepared. Knowing your credit history in full detail will help both you and your lender understand what is affordable for you. Some lenders may require that you pay off the negative debts on your credit report prior to offering financing. This is done sometimes to make owning a home more affordable and to prevent a future homeowner from having too much debt while paying a mortgage. Check your credit report for any discrepancies and have them removed as even the smallest error on your credit report can have a negative effect on your credit score. Furthermore, be realistic about the price of the home that you are considering. Given the fact that bad credit mortgages usually have higher interest rates, choose a home that is affordable.  Overextending oneself on a mortgage can place any homeowner in a precarious situation if they should be unable to make payment.

The dream of owning a home is possible for everyone with bad credit mortgages. Becoming knowledgeable about the requirements associated with these types of mortgages will allow the consumer to be more informed on what is required of them to become a homeowner.