What are Non-QM Eligibility Guidelines

Non-QM Eligibility Guidelines On Non-QM Mortgage Loans

Gustan Cho Associates are mortgage brokers licensed in 48 states

This Article Is About Non-QM Eligibility Guidelines On Non-QM Mortgage Loans

As the major regulatory agencies continue to tighten the guidelines on mortgage lending, the NON-QM mortgage products are thriving.

  • If you have not heard of a NON-QM mortgage loan, this blog is for you
  • Gustan Cho Associates Mortgage Group offer a full slate of NON-QM mortgage products through multiple different investors
  • We have more NON-QM outlets than most lenders
  • In this blog, we will detail the differences between a NON-QM mortgage
  • We will discuss everyday mortgage product, how to start the process for a NON-QM mortgage loan
  • We will also cover a few recent success stories with NON-QM lending

Understanding Non-QM Eligibility Guidelines

First, it is important to understand what NON-QM mortgage stands for. It simply stands for non-qualified mortgage.

  • A qualified mortgage is a loan where the regulations are overseen by the federal government
  • Meaning your everyday Fannie Mae, Freddie Mac, FHA, VA, and USDA mortgage loan file under the QM umbrella
  • For more information on QM mortgages, please see our blog on QM MORTGAGE loans
  • So, what exactly is a non-qualified mortgage?
  • It sounds scary, but it is not

NON-QM mortgage loan simply means you do not have to follow the QM mortgage guidelines.

Non-QM Eligibility Guidelines Depends On The Investor

In fact, NON-QM mortgages make up their own guidelines.

  • Many guidelines are similar to cure mortgages, such as debt to income and loan-to-value requirements
  • A difference comes with NON-QM mortgages are waiting periods after a derogatory event
  • For instance, you may use a NON-QM mortgage loan even one day after a foreclosure
  • A standard QM mortgage product requires you to wait a minimum of two years for VA, three years for FHA, or four years CONVENTIONAL after a foreclosure before you may enter into a new mortgage

A NON-QM mortgage loan is riskier than a QM mortgage loan. With this risk comes higher interest rates, but these loans are not meant to be permanent.

Starting The Non-QM Mortgage Process

How to start a NON-QM mortgage loan:

  • The process is not much different than applying for a QM mortgage
  • Simply call Gustan Cho Associates directly on  800-900-8569 or text us for a faster response or email us at gcho@gustancho.com
  • From there you will be paired with a licensed loan officer in your state

You will be sent an application link that will allow us to verify your credit report.

Documents Required To Start The Mortgage Process

After we verify your credit, you will send in the following documentation to complete your pre-approval:

  • Last 60 Days Bank Statements – to source down payment
  • Last 30 Days Pay Stubs
  • Last Two Years W2’S
  • Last Two Years Tax Returns
  • Driver’s License

Getting Pre-Approved And Starting The Home Buying Process

After your loan officer completes your income and asset qualifications and you meet the Non-QM Eligibility Guidelines, a preapproval letter will be sent to you.

If you are trying to complete a NON-QM refinance, here are the items you will need:

  • Driver’s License
  • Last 30 Days of Pay Stubs
  • Last Two Years Tax Returns
  • Last Two Years W2 or 1099s
  • Mortgage Statement
  • Home Owners Insurance Policy

Types Of Borrowers Who Benefit With Our Non-QM Mortgage Programs
Types Of Borrowers Who Benefit With Our Non-QM Mortgage Programs

Now we will go over a few success stories.

  • Late payments on your mortgage are usually a deal killer for all Conventional and FHA and VA mortgages
  • The automated underwriting system rarely will give you in approval with late payments
  • And if the AUS requires rental verification, there cannot be any missed payments on your rent
  • However NON-QM mortgages do allow for late payments
  • Recently we had a client to sell behind on their mortgage about eight months ago
  • They were going to sell the property but then received a promotion at work
  • This particular client was going to sell their property and pay off their consumer debt while renting for a year to season the late payments
  • However, now that they are staying put with their job, we were able to complete a NON-QM cash-out refinance
  • Even with the late payment and mortgage, they were able to take up to 85% this particular consumer was going to sell their property and pay off their consumer debt while renting for a year to season the late payments

However, now that they are staying put with their job, we were able to complete a NON-QM cash-out refinance.

Late Payments In The Past 12 Months

Even with the late payments on a mortgage, they were able to take cash out up to 85% of the value of their homes.

  • This allows our client to stay in their property, and more importantly pay off their consumer debt
  • This is one way to use the equity in your property to hit the reset button on your financial future
  • This allowed our client to save money monthly while retaining their property
  • Now they are able to refinance this mortgage loan after six payments
  • As soon as their late payments for seasoned a full 12 months, we were able to refinance them into your everyday QM conventional mortgage product
  • Giving them an even lower interest rate and saving even more money
  • As stated above, a NON-QM mortgage loan is not meant to be permanent

These loans are a temporary solution and when the time is right will refinance you out of the NON-QM mortgage.

Popularity Of Non-QM Loans

Why are these loans not more popular?

  • Truth be told many loan officers are not familiar with NON-QM eligibility guidelines
  • In fact, a recent survey was released where 53% of loan originators perceived NON-QM as difficult loans
  • However, this is not the truth
  • In fact, these loans are slightly easier to get done due to fewer regulations

If you have been turned down by another lender and feel like we will be able to help, please give us a call. We are available 7 days a week and even on holidays. Please call us at Gustan Cho Associates at 800-900-8569 or text us for a faster response.

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