Non-QM lenders offer options for: BORROWERS WHO ARE SELF-EMPLOYED A non-qualified mortgage may provide a temporary lending solution until you meet regular mortgage guidelines and can refinance to a traditional loan. Non-QM loans are handy for people who have found their dream home but were denied a home loan under qualified-mortgage standards. Not all lenders offer non-QM products, which makes them harder to find Investors don’t limit the number of financed properties you own Risky features may increase your risk of default Products are available for foreign nationals Interest rates and costs are more expensive than standard loans You won’t have to wait the two to seven years required by qualified mortgage loan programs.Īlternative documentation is allowed to verify income Non-QM lenders often offer programs that allow you to borrow within days of a major recent credit event like a bankruptcy or foreclosure. While a standard QM loan requires you to verify your income with tax returns, W2s and paystubs, a non-QM lender might be able to use your bank statements to calculate income to qualify for your loan. To offset the higher risk lenders take making non-QM loans, you’ll likely pay higher rates, APRs and even upfront fees and points that aren’t permitted on qualified mortgages.įlexibility with your income or credit history. Higher-priced loans with upfront points and fees. You may find a non-QM lender that offers terms longer than 30 years. You’ll make a larger-than-usual payment at the end of a set time if your non-QM loan has a balloon payment. In this case, your loan balance grows, called “negative amortization” in loan terms. Although this is very rare, you may come across a lender that allows you to make payments for less than the interest charged each month. Lenders that offer an interest-only option don’t require you to pay any of your loan balance down but instead just pay the interest accruing each month. To help you qualify for a non-QM, loan the lender may include one or a combination of the following features: A qualified mortgage meets the CFPB’s “ability to repay” rule, which requires that lenders vet your finances and set terms on the loan that you’re likely to be able to pay back. Non-QM loans are mortgages that don’t meet the Consumer Financial Protection Bureau’s (CFPB) requirements to be considered qualified mortgages.
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