Getting to Know Low Doc Refinance Home Loan

You are responsible for all your finances. You have to make sure that you do everything possible to meet all monthly payments, especially mortgage payments. There may be times when you encounter difficulties that would affect your ability to make the payments on time. But you have to remember that your loan is your responsibility. You made the conscious effort to apply for a loan and by doing so, you are also binding yourself into an agreement.

But what if the situation is so difficult that forcing yourself to pay the mortgage would mean you have to sacrifice other more important things like food, education, and health care?

You need to find ways to better manage your finances. Refinancing your home loan is one very good way to do that. It is easier to keep up with monthly mortgage payments with a low doc refinance home loan.

Getting to know a low doc loan

A low doc home loan is a type of loan awarded to people who do not have a chance in getting approved by lenders because they cannot supply the essential documents like proof of income, tax returns, etc.

There are many individuals whose work doesn’t allow them to have the usual paperwork lenders ask for when assessing loan applications. Contractors and self-employed individuals are perfect examples of these. They cannot provide all the necessary paperwork to lenders or, if they do have them, lenders may find it a little hard to assess their risk because there is no certain way to prove their financial status because of the nature of their work.

A low doc (short for low documentation) will give these people a chance to get loans approved without a lot of hassles. There are lenders that will process loan applications by asking for fewer documents or using an entirely different method in assessing risk and eligibility.

Why refinance a low doc loan?         

Refinancing a loan is a great way to better manage payments. A lot of people are bound to experience financial difficulties at one point and this is one of the solutions these people will need.

You can refinance your loan to:

-          Take advantage of better interest rates

-          Change your loan type from variable rate to fixed rate

-          Lower the monthly payment amount

-          Consolidate or roll several debts into just one loan

Lifestyle changes (unemployment, additional expenses, demotion) are the typical cause for refinancing.

The process of getting a refinanced home loan is not that entirely different from the procedure you went through when you initially took out your loan. First you have to make the application, get a valuation, wait for the lenders to assess your eligibility, sign the loan offer, and, if you switched lenders, arrange a meeting with your current one to repay the existing loan and remove their mortgage on the property.

You can refinance your low doc loan and get up to 80% LVR. It’s unusual for lenders to lend more because they are higher risk. But they do exist. The only catch is they are more expensive.

To know your choices, it is best to consult with a mortgage broker. Your broker can help you learn more about low doc refinance home loan. He will be able to better explain the process and walk you through every step until you get your loan.

Once you have refinanced your home loan, you should find it a lot easier to keep up with your monthly mortgage payments and avoid foreclosure.