This article covers 2020 Non-QM Mortgage Guidelines UPDATE Post COVID-19 Outbreak
Gustan Cho Associates are experts in NON-QM mortgage lending.
- We have numerous investors who offer different programs for these types of loans
- In this blog, we will detail what a NON-QM mortgage is and how to apply for one
- You will also update you on some recent document changes to NON-QM lending after the COVID-19 Coronavirus outbreak
2020 Non-QM Mortgage Guidelines UPDATE: Non-QM Loans Defined
A NON-QM mortgage loan is a special mortgage product that does not follow federal lending guidelines put forth by Fannie Mae, Freddie Mac, and HUD.
- These are private investors who are able to lend their own money, allowing them to create their own mortgage products and guidelines
- QM stands for qualified mortgage
- NON-QM simply means non-qualified mortgage
- Since they do not follow the federal guidelines, thousands of Americans are able to buy or refinance homes with these products
- At the beginning of the COVID-19 coronavirus outbreak, NON-QM mortgage products simply went away
- Investors were not honoring their loan products due to uncertainty in the market
Even the individuals who are already in the loan process were not able to close on their transactions. As of recent, NON-QM mortgage lending has made a comeback.
2020 Non-QM Mortgage Guidelines UPDATE On Relaunched Loan Programs
Popular NON-QM mortgage products after COVID-19 coronavirus outbreak
- Bank statement mortgages for self-employed borrowers
- Most self-employed borrowers use tax write-offs to increase take-home pay
- Tax code for self-employed individuals allows for many legitimate write-offs
- These write-offs count against your debt to income ratio when you attempt to buy a home
- Federal guidelines outline exactly how mortgage companies can calculate self-employed income
- Many write-offs will count against your qualifications
- If that is your scenario, a bank statement loan may be a great alternative for you
- A bank statement loan will calculate your income based on business-related deposits
- Typically, 50% of your business-related deposits will be counted as qualifying income
Currently, these mortgages require at least a 15% down payment depending on credit score. Lower credit scores will require a larger down payment.
Asset Depletion Mortgage Loan Programs
Asset depletion mortgages. While Freddie Mac does offer an asset depletion program, it is nowhere near as forgiving as a NON-QM asset depletion loan.
- Many borrowers, especially retired borrowers may have a large nest egg of liquid assets but low take-home pay
- This mortgage product allows you to use your liquid assets as qualifying income
- You may even count other income such as pension or Social Security income
- They will take your total assets and divide them by 60 months
That figure will be added as qualifying income to your mortgage file. Adding the assets will dramatically increase a borrower’s purchasing power.
Qualifying For Non-QM Home Mortgages
Applying for a NON-QM mortgage loan with Gustan Cho Associates is very similar to applying for a QM mortgage.
- Your first call Mike Gracz on 630-659-7644 to discuss your mortgage qualifications, Mike is the NON-QM expert!
- From there, Mike will fit you into the best NON-QM mortgage product available
- You will be paired with a licensed loan officer in your state
- You will complete your application with an online link that will give your loan officer permission to verify their credit report
- Just like a QM mortgage, you will go through the preapproval process
Depending on the loan program, your loan officer will need certain documentation such as bank statements, pay stubs, tax returns, driver’s license or state ID, and more.
Once you send these items in your loan officer will complete the preapproval process. Since these loans are slightly different compared to your everyday mortgage, many times your loan officer will need to submit all of your documentation to the NON-QM investor. They will go through a quick pre-qualification process on your file. You will then be issued a preapproval letter or start the buying or refinancing process.
2020 Non-QM Mortgage Guidelines UPDATE: Gustan Cho Associates Relaunched Non-QM Loans
As you can see from this blog, NON-QM mortgage lending is coming back. Gustan Cho Associates are experts when it comes to NON-QM mortgage lending. While these programs are slowly coming back to the market, it is unlikely when they will be as aggressive as they were before the COVID-19 coronavirus outbreak. For example, the 5% down jumbo mortgage product is not available at this time. This product was incredibly popular before the pandemic. We hope to see NON-QM mortgage lending expand even further in the near future. For any mortgage-related questions, please call Mike Gracz on 630-659-7644. Mike can also be reached via email at email@example.com We look forward to helping you buy or refinance your next home.
August 28, 2020 - 4 min read