There are wide-ranging mortgage options available to borrowers today. The industry is quite vast, and no one-size-fits-all solution may apply to individual needs. But what if you don’t fit the government standards when obtaining a mortgage? Non-qualified mortgage loans may be for you. It is one option gaining popularity with borrowers, especially those who do not qualify for traditional mortgages.
What Is A Non-QM Loan & Who Can Benefit From It?
Non-qualified mortgage loans (Non-QM) are any loans that do not necessitate meeting the standard criteria of a qualified loan (QM). These are available to those having an unconventional income stream. Once you obtain the loan, it can be used to refi your investment, cash out a refi, or finance an owner-occupied property. Besides, Non-QM loans products are expected to grow in the coming years, which is a bright spot for both lenders and borrowers.
However, remember that not all lenders offer these types of loans in Clifton, New Jersey. It is best to look forward to working with someone who has a flexible underwriting process and personalized solutions. It isn’t an agency-backed mortgage product. Non-QM loans are said to be non-agencybacked security, also labeled as “private.” Besides, a Non-QM loan has very versatile qualification criteria. It benefits those with alternative income sources, including:
- Self-employed business owners
- Hospitality workers
- Foreign nationals
- Real estate investors
- Prime/ non-prime borrowers
- Someone with significant assets
- Retirees with fluctuating earnings
- Living off of investment property
- Those with high DTI ratios
- If you have limited documentation
- Even those who have a blemished credit history
If you have had difficulty qualifying for a traditional loan in the past but have assets or earn income the non-traditional way, this form of loan is for you. Lenders have their own set of guidelines to ensure both parties are protected in the worst-case scenario.
Are Non-QM Loans Safe?
Non-qualified mortgage loans are inherently more precarious than qualified loans. But these aren’t “bad.” The misconception arises from the fact that its features are a little perilous compared to qualified loans. It is natural to think this way since both types have varying eligibility requirements, but the processes are pretty similar.
Non-QM loans are just as great as a qualified mortgage, especially for borrowers with specific circumstances. What you must remember is that the loans have a high rate of interest and are harder to find. Also, the benefits it offers outdo any risks that come along. Some of the crucial advantages include, but aren’t limited to the following:
- It is a no-doc income verification mortgage option
- Ideal for one to four family housing units
- Self-employed candidates area top priority
- Underwriting guidelines are more relaxed and versatile
- Loans close faster than qualified mortgages
Besides, you will have to ascertain your potential to pay back the loan since every lender is subject to following the ability-to-repay rule. A loan officer also helps determine whether or not this is a suitable option for you, making the decision even more secure. Thus, it is prudent to partner with a licensed mortgage lender in Clifton. They can comprehensively understand your requirements and determine your candidature for a non-qualified mortgage loan.
What Else Must You Know?
Indeed you will have to compromise with the stability and interest rates of Non-QM loans, but these offer the benefit of flexibility and customization. You can demonstrate a variety of income sources to take out the loan with features such as an interest-only payment. In addition to that, underwriting may be stricter than those with qualified mortgage underwriting guidelines. Higher down payments, interest rates, and balloon payments secure the lender’s interest if you default on an already risky product.
If you are looking for alternatives or stable financial products, strengthen your credit score and provide steady income proof. This way, you can obtain a qualified loan and avoid needing non-qualified mortgage loans. However, if you seek Non-QM loans despite the uncertainties, look to partner with someone who can also present certain legal protections. If you can pay off the loans without any delay or hindrance, the non-qualified mortgage may be a viable option for your investment needs.
Are You Interested In A Non-Qualified Mortgage Loan?
Not every mortgage lender will offer a non-qualified mortgage loan to potential clients, but Real Estate Funding Solutions does. This is a specialized business segment, and we are a trusted name in Clifton, New Jersey, and around. The loan option is designed to show alternative income verification methods and help those who couldn’t make it with a qualified mortgage.
If you struggle to get the financing you need, please feel free to get in touch with us. You can count on us to obtain a suitable solution. One of our loan experts will help you navigate your options and move forward with a Non-QM loan if that suits you best. Got more questions? Don’t fret. We are happy to assist you better with the right products. Contact us today and discuss your requirements.
