2020 Non-QM Mortgage Update After The COVID-19 Crisis
This ARTICLE On 2020 Non-QM Mortgage Update After The COVID-19 Crisis Was PUBLISHED On July 21st, 2020
2020 Non-QM Mortgage Update After The COVID-19 Crisis and eligibility requirements:
- If you have been following Gustan Cho Associates you will know that NON-QM mortgage lending is starting to come back
- At the beginning of the COVID-19 coronavirus outbreak, all of our NON-QM investors froze their mortgage lending products
- Even for borrowers who are already in the process of completing these transactions, they 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 of society with not much global conflict or financial conflict
- However, the outbreak of the COVID-19 coronavirus outbreak seemed to change that overnight
- The global economy was stopped on a dime
- At the beginning of March, 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 2020 Non-QM Mortgage Update After The COVID-19 Crisis.
2020 Non-QM Mortgage Update On Loan Programs
Over the past month and a half or so, NON-QM mortgage products have started to roll 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.
2020 Non-QM Mortgage Update On Reopened Non-QM Loans
NON-QM programs now available:
- Standard purchase transaction
- 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 at 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.
- 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 home to pay off other debts and save money monthly
- 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 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.
2020 Non-QM Mortgage Update 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 630-659-7644 or send an email to [email protected]
- 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 Lender: Gustan Cho Associates
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.