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
NON-QM CASH-OUT REFINANCE:
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
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
- 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
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
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 email@example.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.
Gustan Cho Associates offers the following non-QM mortgage loan programs:
- 95% LTV Jumbo Loans With No Mortgage Insurance
- Bank Statement Loans For Self Employed Borrowers
- No waiting period after housing event and bankruptcy discharge
- Credit scores down to 500 on both purchase and refinance transactions
- Asset Depletion Loan Programs
- Foreign Nationals
- No doc investment property loans