Today, due to identity stealing, many do not feel comfortable disclosing their financial history to lenders when in the process of buying property or requesting a loan.  Other people have trouble documenting their financial status because they are self-employed, unemployed, work on commission, or are sole proprietors.  There are two options which suit these particular borrowers, a no doc loan or no ratio loan.  Each serves a different purpose.

With a no doc loan you are not required to document your financial history, current income, assets, or employment status.  Banks do, however, require good credit.  Your credit history should have had a few accounts rated high within the past two years, and you need a credit score of at least 620.  A no doc loan is for creditworthy people who want privacy and can afford to pay for it.  You will need to provide the lender with your name, social security number, and information about the property being purchased.  Because of the privacy convenience, the interest rate on these loans will be a bit higher than the norm. A down payment will also be necessary for these loans.  If you can, however, verify employment within the past two years, then you may wish to opt for a no ratio loan.

No ratio loans are ideal for affluent individuals, retirees with multiple investments, people going through a divorce, dealing with the death of a spouse, or are experiencing a career change.  To make purchases, these loans will require proof of your employment and assets.  This is not usually the case if you are choosing to refinance.  Your job description must show that you have the ability to repay the mortgage. You do not, however, need to state your income, provide pay stubs, W2s, or tax returns. You should have a credit score somewhere between 680 and 620. You will have to list all of your assets such as money you have in the bank, stocks and bonds, real estate, and ownership stakes in other businesses.  The usual rate for a no ratio mortgage is about a half-point above the rate for a traditional mortgage and could be anywhere up to three points higher, depending on your credit score, size of down payment, and the appraisal of the property. 

A no ratio loan and no doc loan truly benefit those who do not want to disclose their financial history to possible lenders.  The interest rates may be slightly higher, but the price may be worth paying in order to maintain your privacy.

My Mortgage Broker is a nationwide direct lender offering many different loan products including No Doc, Low Doc, No Ratio Loan, State Income, Super Jumbo and Interest Only as well as traditional financing. My Mortgage Broker is backed by a banking institution and has the capability to approve and fund loans quickly.