NON-QM Cash-Out Refinance Mortgage Guidelines

In this blog, we will cover and discuss non-QM cash-out refinance mortgage guidelines. NON-QM loans are one of the most popular loan programs in the United States. There are no waiting period requirements after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. NON-QM loans are not just for home buyers with bad credit. Many self-employed borrowers with perfect credit benefit from non-QM bank statement loans where no income tax returns are required.

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Non-QM Loans Are Not Hard Money Loans

Many borrowers often mistake non-QM loans with hard money and/or subprime loans. That is not the case. It is possible to get non-QM mortgage rates in the 4.0% to 5.0% range. You can also buy down mortgage rates on non-QM loans. There are no maximum loan limit caps on non-QM loans. This is a great benefit during times of high home appreciation where you can maximize in getting a non-QM cash-out refinance due to no maximum loan limit.

Non-QM Mortgage Rates Versus Traditional Rates

Non-QM mortgage rates are dependent on borrower’s credit scores and down payment. The higher the credit scores and the more down payment borrowers put down, the lower the rates. Borrowers can also buy down mortgage rates with discount points. Non-QM loans are for both purchase and refinance transactions. There is no maximum loan limits.

Non-QM Mortgages for Self-Employed Borrowers with No Income Tax Returns

NON-QM Jumbo Mortgages enables self-employed borrowers with no tax returns to qualify just using their business bank statements and under 700 credit scores. There is no private mortgage insurance required on all non-QM loans. There are non-QM mortgages for owner-occupant primary homes and investment homes. In this blog, we will discuss NON-QM Cash-Out Refinance Mortgage Guidelines for homeowners and how to get the best non-QM mortgage rates.

Benefits Of NON-QM Cash-Out Refinance Mortgage Versus Other Loan Programs

Real estate prices have been appreciating in most parts of the United States. HUD and the Federal Housing Finance Agency (FHFA) have been increasing FHA and Conventional loan limits for the past five years due to increasing home prices. Many homebuyers are being priced out of the market. Many homeowners who have purchase homes in recent years are enjoying the sudden increase in the value of their homes. Home prices are skyrocketing despite the coronavirus pandemic.

Maximum Loan Limits On Mortgage Loans

FHA, VA, and Conventional Loans have maximum loan limits. HUD’s maximum loan limits for 2022 are now capped at $420,680. Conventional loan limits for 2022 are now capped at $647,200. The great news with VA loans is there is no longer a maximum loan amount on VA loans. There are areas in Florida, Texas, California, Colorado, Georgia, Michigan, Mississippi, New Jersey, Ohio, Kentucky, and other states that have seen home values appreciate year after year since 2012. The FHFA has increased conventional loan limits six years in a row due to rising home prices. HUD, the parent of FHA, has increased FHA Loan Limits for three years in a row due to increasing home values. One of the greatest benefits of non-QM cash-out refinance mortgage loans is there are no maximum loan limits. Gustan Cho Associates will go up to a $3 million loan limit but can go higher on a case-by-case basis analysis.

Waiting Period Requirements On Cash-Out Mortgages

There is a mandatory waiting period on cash-out mortgages. The waiting period depends on the type of loan program. FHA requires a six-month waiting period on rate and term refinances. FHA requires a one-year waiting period on cash-out refinances. Maximum loan to value on FHA Loans on cash-out refinances is 85% LTV. Fannie Mae and Freddie Mac require a six-month waiting period on rate and term refinances and cash-out refinances on conventional loans. Maximum loan to value on non-QM cash-out is 80%.

Waiting Period Requirements After Home Purchase Non-QM Cash-Out Mortgage Guidelines

NON-QM Cash-Out Refinance Mortgage Guidelines require a six-month waiting period on rate and term and cash-out refinance mortgages on owner-occupant homes. The maximum loan to value on non-QM cash-out is 80% LTV. The cash-out refinance waiting period gets extended to one year on investment home mortgages. In order to be eligible for cash-out refinance mortgages, you need equity in your home with the exception of VA Loans. VA Home Loans allows 100% loan to value on cash-out refinancing. For more information on this topic and/or other mortgages/real estate-related topics, please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available 7 days a week, evenings, weekends, and holidays. Gustan Cho Associates has countless relationships with non-QM wholesale lenders.

Non-QM Cash-Out Refinance Mortgage Lending Guidelines for Homeowners

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.

NON-QM Cash-Out Mortgage Guidelines

The stepping stone on NON-QM Cash-Out Refinance. Many Americans go through tough financial times. During these times they learn many lessons about 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.

Case Scenario Of A Borrower

Here are an example and case scenarios. 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. At this time, he also paid down his mortgage loan to $350,000.

Mortgage Guidelines on Employment Gaps

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 card 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 Refinance Mortgage 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 being 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 to 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

TOTAL MONTHLY PAYMENT $ 3905

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 Mortgage

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!

Types of Mortgage Loan Programs Homeowners Can Refinance

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

Homeowners who feel they will benefit from NON-QM Cash-Out Refinance can reach out to Mike Gracz at (800) 900-8569 or text Michael for a faster response. Or send an email to Mike at gcho@gustancho.com 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.