NON-QM Cash-Out Refinance Mortgage Lending Guidelines


This BLOG On NON-QM Cash-Out Refinance Mortgage Lending Guidelines Was UPDATED And PUBLISHED On February 13th, 2020

What are the guidelines for NON-QM Cash-Out Refinance mortgages


One of the most popular NON-QM loans is our NON-QM Cash-Out Refinance Loan Program:

  • We will go over the reasons these are so popular throughout this blog. Many clients use this as a stepping stone to rebuilding their financial future
  • We all know the term the “American dream”
  • Homeownership is supposed to be used as an asset that creates stability for every American
  • Throwing your money away on rent does not help you in the long-term
  • There are situations where the equity in your house can be put to work for you to help you get out of a bind

In this article, we will discuss and cover NON-QM Cash-Out Refinance Mortgage Lending Guidelines. We will go over an example in this blog.

NON-QM Cash-Out Mortgage Guidelines

The stepping stone NON-QM Cash-Out Refinance.

Many Americans go through tough financial times.

  • During these times they learn many lessons of what not to do with their finances
  • That being said, we will now go over an example that is more common than not
  • This stepping stone is something that the Gustan Cho Associates help clients with all the time

Here is an example:

  • Matt owns his primary residence in Breckenridge Colorado
  • He bought the home in 2011 for $450,000
  • When Matt bought the house, he put down 10% and had an original mortgage for $405,000
  • Since then he has put some work into the house and property values have gone up
  • The home is now worth about $700,000
  • In this time, he also paid down his mortgage loan to $350,000
  • About 2 years ago Matt lost his job
  • He has worked here and there but struggled very hard on most of his bills
  • However, he always paid his mortgage on time
  • During these tough times, Matt missed many revolving credit cards payments and his car payment
  • Now his credit score is down to 540
  • While out of work, Matt maxed out his credit card to $30,000 and fell behind on his car payment
  • With a credit score like this and recent late payments, he cannot obtain conventional or FHA financing
  • The good news is 4 months ago Matt went back to work full time
  • He had a job gap longer than 6 months
  • This is where the NON-QM loan can save your finances

NON-QM Cash-Out Versus Traditional Loan Programs

What are the NON-QM payments versus traditional loan programs

As mentioned above, Matt cannot obtain conventional or FHA financing due to his credit score and late payments.

  • Since his job Gap was longer than 6 months, he needs to return to the workforce for at least 6 months before eligible for FHA or conventional financing
  • This is where NON-QM can get creative for potential clients
  • Each file is looked at on a case-by-case basis
  • At times, with a strong letter of explanation, borrowers can get an exception on mortgage guidelines
  • In this particular case, the underwriter was comfortable with Matt being back to work for only 4 months
  • Matt was able to put the equity in his home to work for him, allowing him to get back on his feet
  • Matt completed a NON-QM Cash-Out Refinance

See below:

  • Mortgage Balance – $350,000    
  • Payment $2,504 (including escrows of $408)
  • Amex – $20,000 minimum payment $ 602
  • Visa – $10,000 minimum payment $ 287
  • Car – $15,000 payment $ 512


Matt elected to pay everything off and combine his bills into one monthly payment. He also took out a safety blanket to not rely on high-interest credit cards in the future.

New NON-QM Mortgage:

  • $420,000 payment
  • $3,707 (including escrows of $408)

Reducing Overall Monthly Payments With NON-QM Cash-Out Refinance

You might be looking at this saying Matt is going to save only $198 a month? Is that even worth it?

  • The answer is yes, let me tell you why
  • At first glance, this seems like a bad idea to move back to a 30-year mortgage term to save $200 a month
  • But what this allows Matt to do is clean up his credit instantly!
  • If you’ve ever had over $10,000 on a credit card you will understand how hard it is to pay that off
  • The minimum payments alone are tough enough to make and those do not even touch the principal balance of what you owe
  • At this point, Matt paid off all of his debt
  • He had one payment to make
  • He saw his credit score increase dramatically
  • Fast forward 12 months, Matt’s late payments are now seasoned!
  • He is eligible to refinance into conventional financing without any mortgage insurance
  • More often than not when you go to refinance, you can refinance into a 20-year term and keep your payments identical
  • Or close to
  • That being said Matt did not skip a beat paying off his original mortgage within 30 years
  • He is on the same track and same time schedule to pay the loan off

As you can see from the example above. This is a true stepping stone. At the end of the day, Matt ended up paying his original loan off in the same time frame. Or you have the ability to refinance into a 30-year loan to keep the lowest monthly payment possible. The possibilities are endless. putting the equity of your home to work for you is a great way to get your life back on track.

Qualifying For NON-QM Cash-Out Loans

How do you qualify for non-QM loans?

Homeowners who feel they will benefit from NON-QM Cash-Out Refinance can reach out to Mike Gracz at 630-659-7644 or text Michael for faster response.

  • Or send email Mike at
  • Mike is THE NON-QM EXPERT on  NON-QM Cash-Out Refinance Mortgages at Gustan Cho Associates
  • We understand that stressful situations come up in life and we are here to help
  • If for any reason you do not qualify for a loan today, we will set you up with a plan to qualify as soon as possible
  • Please reach out to us for all of your mortgage needs

Gustan Cho Associates Mortgage Group is a national mortgage company with no overlays on government and conforming loans.

Gustan Cho Associates offers the following non-QM mortgage loan programs:

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