Ringing Ceders

No doc loans are generally short term loans because it is in the best interest of both the lender as well as the borrower.  Since the lender wants to realize a profit he will generally charge a high interest rate for the loan. 

Naturally he wants to make the most money for his investment and if interest isn’t being accrued over a long period of time he needs to adjust the rate accordingly.  From the perspective of the borrower, it would be in his best interest to refinance through a more conventional lender as quickly as possible in order to obtain a better rate. 

Another reason the borrower may want a short term loan is that quite often short term, no doc loans, are interest only.  No money is being paid on the original amount borrowed, so he will want to refinance over a longer period to start paying down the principle.