Mortgages – No Doc Mortgages
Question: Can anyone offer the pros and cons of going with a no doc mortgage? >I seems to me that there have to be some major pit falls, otherwise everyone >would be homeowners.
Answer: The “pro” is there is less documentation needed as to INCOME. It is a bit of a misnomer to call it a *NO* doc even though that’s what it is referred to (now I suppose somebody will try to sue claiming that they should be entitled to a *no* doc of any kind mortgage). You still have to have decent credit history.
There are no “pitfalls”, as in some hidden trap. The downpayment and interest requirements are stated early on.
To get a no-doc you typpically need equity of 30% to 40%. This is why the bank is willing to leave it up to your judgement how much of a payment you can afford; more of their approval decision relies on the equity in the property than it does on the person’s job or income. Since “everyone” doesn’t have that kind of down payment (see all the posts on this group about people talking about 10%, 5% or 0% down) “everyone” would not be a homeowner with no-docs. Therefore, if “everyone” relied on a no-doc, it looks like there would be FEWER homeowners.
If you think a no-doc means that with bad credit and nothing down you still get a mortgage, there is a bridge in Brooklyn that perhaps you’d like to buy…..
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