For traditional mortgage loans, banks usually require proof of stable, consistent income; that usually requires extensive paperwork proving your income over time. For some people—those who are self-employed, contractors, or those who otherwise have no pay stubs or income tax returns that will conclusively show regular, predictable means of income—providing the kind of financial proof required for a traditional loan may be difficult or even impossible. If you find yourself in this situation, the answer to your problems may well be no doc loans.
The No Doc Loan: A Great Solution
Lenders providing no doc loans understand the needs of the individual who may, for one reason or another, be unable to provide the kind of documentation that is usually necessary to secure lending. A no doc loan is exactly what it sounds like—a loan requiring none of the traditional documentation. No doc loans are perfect for people who are self-employed, freelancers, seasonal workers, investors, those who earn the bulk of their income from tips or other undocumented means, or contractors who either have no predictable, stable income or no proof of salary or paystubs to show lenders.
It can be next to impossible to convince traditional lenders with traditional loan terms that you’re a good candidate without this documentation. They generally require pay stubs, income tax returns, bank records or other proof of a recurring, reliable income before they will even consider granting you a traditional mortgage, construction, or refinancing loan. This isn’t the case with no doc loans—your stated income is all that you need to start the process and to get you on the way to securing the financing you require.
The Difference in No Doc Loans
No doc loans are generally assumed to be fairly rigid mortgage products with little to no room for flexibility. In fact, these loans allow the individual seeking a no doc loan the opportunity to choose an option for borrowing that suits whatever their specific needs may happen to be. The terms of no doc loans will carefully weigh the individual factors of your unique circumstances, assess what your position is, and provide you with appropriate lending terms allowing you to quickly and easily secure the financing you need. This could be for a property purchase or construction, the refinancing of either residential or commercial property, or other endeavors.
These options are a great feature of no doc loans, but the real benefit here is that a no doc loan allows borrowers the chance to get the funding they need when other loan options would be entirely unavailable or, for one reason or another, unattractive to them. A no doc loan represents a significant amount of financial freedom reflecting your individual situation.
It shouldn’t matter how or when you earn your income, and you shouldn’t be punished for being an entrepreneur, small business owner, or for otherwise being independent of a traditional “nine-to-five” lifestyle. The absence of a traditional income path brings with it the absence of traditional proof—but a no doc loan provides you with the freedom and flexibility you need to pursue your dreams.
What You Bring to the Table
If you don’t have the type of income verification needed to secure a traditional loan, a no doc loan is a fantastic option. There are, however, some factors you will need to consider. Lenders offering no doc loans (also sometimes called hard money loans, though the individual loan terms may differ) are assuming a much higher risk by not requiring initial documentation—they’re taking you at your word. They may, therefore, may require you to have a credit score in the good to excellent range, may require a larger initial down payment, and may also require an initial appraisal of the property you wish to buy or the project you are undertaking.
A no doc loan doesn’t require the normal income or employment verification. Therefore, it provides a greater degree of flexibility. That flexibility has its associated costs—you may also expect to pay a much higher interest rate than other loans, with a much shorter repayment term. However, for the borrower who simply can’t or does not wish to provide traditional documentation, the additional expense of a no doc loan is well worth it.
AS-IS Loans Has the Solution for You
AS-IS Loans wants to help you secure financing through a no doc or hard money loan, and will work with you regardless of your situation. Contact us today for a consultation to learn how we can help you secure the funding you need.