In this blog, we will cover and discuss the non-QM mortgage update from non-prime lenders. Ever since the coronavirus outbreak in February 2020, there have been many changes in non-QM mortgage loans. Non-QM mortgage update from non-prime lenders seems like it is happening more often than any other mortgage program. Recently non-QM mortgage lender Sprout Mortgage went out of business leaving thousands of borrowers hanging after they got a clear to close. Non-QM Mortgage Update from non-prime lenders on eligibility requirements differs from lender to lender. If you have been following Gustan Cho Associates you will know that NON-QM mortgage lending has different lending requirements depending on the individual wholesale investor.
Non-QM Mortgage Update From Non-Prime Lenders Post COVID-19 ERA
At the beginning of the COVID-19 coronavirus outbreak, all of our NON-QM investors froze their mortgage lending products. Even borrowers who are already in the process of completing these transactions, all of a sudden did not have a loan available. Something we have not seen since the real estate crash of 2008. We went through a sweet spot in society with not much global conflict or financial conflict. However, the outbreak of the COVID-19 coronavirus outbreak seemed to change overnight.
Why Are Non-QM Loan Programs Constantly Changing?
Non-Prime mortgages have always been popular. Before the 2008 financial crisis, non-QM loans were the most popular loan program in the nation. Then, when the global economy was stopped on a dime. At the beginning of March 2020 after the coronavirus outbreak, we saw plenty of changes in the mortgage market. With most businesses being shut down, many NON-QM mortgage borrowers took a hard hit. Many NON-QM mortgage borrowers are self-employed individuals, who could not work during the pandemic. In this blog, we will detail some of the available NON-QM mortgage products. In this article, we will discuss and cover the Non-QM Mortgage Update from non-prime lenders during today’s mortgage market.
Non-QM Mortgage Update From Non-Prime Lenders on Loan Programs
After a few months after the initial coronavirus outbreak around 2020, non-prime lenders started to roll out NON-QM mortgage products back out. When they first read emerged, they required a 30% down payment, 740 credit score, and a 12 months RESERVE requirement for purchase transactions. Refinances had the same credit and reserve requirements and were capped at 70% loan to value. NON-QM guidelines are stricter than they’ve ever been, but they have eased up a little bit in the past few weeks. It is now possible to get a NON-QM mortgage loan with credit scores in the 600s with as little as a 20% down payment. The current NON-QM loan programs are steps in the right direction. NON-QM mortgage loans currently have high reserve requirements. Anywhere between 6 and 12 months depending on the mortgage product.
Non-QM Mortgage Update From Non-Prime Lenders With Surging Rates and High Inflation
The non-QM mortgage update from non-prime lenders today is very volatile. Non-QM wholesale mortgage lenders are afraid of the economy, rates, inflation, and the secondary mortgage markets. Many wholesale non-QM lenders have implemented tougher lending requirements. However, Gustan Cho Associates have dozens of strong non-prime mortgage lenders with special unique niche mortgage programs. We offer dozens of different types of standard purchase and refinance transaction programs.
What Are The Most Popular Types of Non-Prime Mortgage Programs?
NON-QM mortgage products now allow full documentation or bank statement loans for purchase transactions. Based on the credit score, your reserve requirement will vary between 6 and 12 months. In order to use bank statements, you currently need to have a 700 credit score or higher. If using a full documentation loan, you can have a credit score as low as 660. Before the COVID-19 coronavirus outbreak, these credit score requirements were as low as 500. We expect to see the credit score requirements ease as the global market starts to recover.
Refinancing Home Mortgage With Non-QM Loans
NON-QM refinance transactions is becoming more popular among homeowners who cannot qualify for traditional mortgages. With rates dropping across the board, NON-QM mortgage refinancing has become popular. It is possible to complete a rate and term or cash-out refinance with a NON-QM mortgage lending product. Once again, the requirements are stricter than they were prior to the pandemic but they are still a good loan for thousands of Americans. Most NON-QM refinance transactions are cash-out refinances. They allow borrowers to utilize the equity in their homes to pay off other debts and save money monthly.
Non-QM Mortgage Update on Cash-Out Refinance Loans
Many Americans use these NON-QM cash-out transactions as a Band-Aid fix for their current financial situation. A borrower will typically use the NON-QM cash-out transactions to pay off high-interest credit card debt or other bills. After being in the NON-QM loan for at least six months (or as soon as they qualify for a conventional mortgage), they will usually refinance again to a conventional mortgage loan and start paying a much lower interest rate.
Financing Investment Properties With Non-QM Loans
Investment property NON-QM mortgages. Investment properties are becoming more and more popular as there has been a dip in home prices in many areas.
- The COVID-19 coronavirus outbreak has made some areas of our country depreciate while others have stayed relatively flat
- This can be a good time to buy an investment property
- NON-QM mortgage loans allow full documentation, bank statement income, and investor cash flow to buy investment properties
- The investor cash flow product has recently re-emerged
- This is a mortgage product where the income from an investment property must cover the NON-QM mortgage payment
- It is the closest thing to a no-document loan currently available
- These currently require a 25% down payment (Cash-Out Refinance capped at 70% LTV)
Many borrowers using this program are happy to learn that the mortgage my close in an LLC for tax purposes.
Non-QM Mortgage Update From Non-Prime Lenders on Jumbo Non-QM Loans
NON-QM JUMBO mortgages:
- NON-QM jumbo mortgages have always been very popular
- Your everyday jumbo mortgage can be quite difficult to qualify for
- Many Americans turn to NON-QM Mortgage products when buying a high-value property
- The qualifications make it easier to obtain
Below are the current requirements for NON-QM Jumbo loans:
- 90% LTV with 740+ scores up to $2,000,000
- 85% LTV with 720+ score
- 80% LTV with 660+ score
- 80% LTV Cash out
- Derogatory Credit Event Seasoning must be 4+ years
- DTI 40/50
Qualifying For Non-QM Loans After Coronavirus Mortgage Crisis
How to apply for a NON-QM mortgage loan?
- Applying for a NON-QM mortgage loan is as easy as ever
- First, call Mike Gracz on (800) 900-8569 or send an email to gcho@gustancho.com
- Mike will go over your mortgage qualifications and then pair you with a licensed loan officer in your state
- You will then complete an online application link and upload the required documentation
- You will be issued a preapproval letter or sent loan disclosures for a refinance transaction
- The process is not much different than applying for your everyday mortgage products
- Due to the increased volume of mortgage applications, these loans are typically taking between 45 and 60 days to close
- In the times of COVID-19 coronavirus, it is important to structure your offer with enough time to close
30-day closings are becoming harder and harder to hit with the increased volume in the mortgage market.
Expert Non-QM Mortgage Lenders
Gustan Cho Associates are experts in NON-QM mortgage lending. We are excited to see these products roll back out. About every two weeks, we are receiving updates with relaxed qualifications and more NON-QM mortgage products are becoming available. These are all good signs for the future of the mortgage market. Whether you are in the market for a QM or NON-QM mortgage loan, please call the experts at Gustan Cho Associates today. We are available seven days a week to answer your mortgage questions. We look forward to helping you and your family buy or refinance their next property.
