This guide covers the updated non-QM guidelines post-coronavirus outbreak and political scare. Non-QM guidelines are not uniform agency lending guidelines like government and conventional loans. The individual wholesale lender sets Non-QM guidelines. Just because one lender has a set of non-QM guidelines does not mean another will have the same lending requirements. The post-coronavirus updated Non-QM guidelines constantly change as the weeks pass.
Non-QM loans were one of the hottest home mortgage programs in the housing market before the coronavirus outbreak. Non-QM loans are alternative types of home financing for borrowers who do not qualify for government and conventional loans. Non-QM loans are not just for homebuyers or homeowners with bad credit. There are borrowers with great credit and credit profiles who benefit from non-QM loans.
The rumors that non-QM loans were dead and would never come back proved false. The team at Gustan Cho Associates is thriving with the flood of non-QM mortgage loan applications. Not all of the mortgage products are back. However, our investors are lifting the restrictions as time passes. The non-QM lending programs at Gustan Cho Associates are expected to return in full force in the coming weeks. The following paragraphs will cover updated non-QM guidelines post-COVID-19 ERA.
UPDATED Non-QM Guidelines POST Coronavirus Outbreak
There are many benefits to alternative home mortgages. Non-QM mortgages give mortgage borrowers who need alternative financing the chance of becoming homeowners sooner than later. This section covers mortgage borrowers who benefit from non-QM financing.
Borrowers who cannot meet the mandatory waiting period after bankruptcy or a housing event such as a foreclosure, deed-in-lieu of foreclosure, or short sale. Non-QM lenders generally do not have a minimum waiting period after bankruptcy or a housing event. Bank statement mortgage loans for self-employed borrowers with no income tax returns required. Late payments, including late mortgage payments, in the past 12 months.
Borrowers who exceed the maximum government or conventional loan limits. There is no maximum loan limit on non-QM mortgages. There is no private mortgage insurance. Non-QM mortgages exempt deferred student loans for longer than 12 months. Borrowers with credit scores down to 500 FICO. Jumbo loans with lower credit scores and bad credit. Since non-QM mortgages are portfolio loans, each lender has its guidelines. Most lenders will negotiate or make exceptions on a case-per-case file. Lenders can and are willing to make exceptions if the deal makes sense.
Non-QM Guidelines After Bankruptcy and Foreclosure
If you’ve recently gone through bankruptcy, you again might be wondering if you’ll ever be able to get a loan. The amazing news is that getting approved for a mortgage after bankruptcy or a housing event is not impossible. Here are some solid tips on improving your chances of getting approved. One of the best ways to increase your odds of getting approved for a mortgage after bankruptcy is to meet government or conventional loans’ minimum waiting period requirements. Or find someone without a prior bankruptcy or foreclosure to be on the loan, and you be on title together with the main borrower. You can cut the waiting period to one year after bankruptcy or foreclosure on non-QM loans, explains John Strange of Gustan Cho Associates:
FHA, VA, USDA, and conventional loans require a two to four year waiting period after bankruptcy. Non-QM loans allow borrowers one year out of bankruptcy or foreclosure to qualify for Non-QM loans.
Updated non-QM guidelines post-COVID-19 ERA that changed for the worse is the non-QM loans one day after bankruptcy and foreclosure. The no waiting period after bankruptcy and foreclosure non-QM guidelines has been changed to one year after bankruptcy and foreclosure by most non-QM wholesale mortgage lenders. The updated non-QM guidelines on non-QM loans after bankruptcy or a housing event may return someday with no waiting period. However, most wholesale lenders now have a one-year waiting period after bankruptcy or a housing event. A housing event is a foreclosure, a deed-in-lieu of foreclosure, or a short sale.
Non-QM Mortgage Post Coronavirus Pandemic
The coronavirus pandemic has devastated the mortgage markets. At least temporarily. Non-QM mortgages have been halted until further notice by all lenders. Many borrowers who had locked their non-QM mortgage rates and were set to close have seen their dream of homeownership halted until further notice. John Strange, a senior loan officer at Gustan Cho Associates, shares his throughout about the updated non-QM guidelines on non-prime loans after the coronavirus outbreak and scare as follows:
The team at Gustan Cho Associates had over 40% of its pipeline canceled due to the coronavirus pandemic crisis. A handful of non-QM lenders either closed their doors or went bankrupt. The future of alternative financing seemed gloomy and not too promising. As time passed, the good news is that non-QM lending is returning.
Lending guidelines are easing up as time passes. If the deal makes sense, lenders are willing to make an exception to make the deal work. Gustan Cho Associates is an aggressive lender of non-traditional mortgages. Gustan Cho Associates has recently launched home mortgages with one day out of bankruptcy or foreclosure.
Best Non-Traditional Lenders With Lenient Non-QM Guidelines
Over 80% of our borrowers at Gustan Cho Associates could not qualify at other lenders due to their lender overlays. Gustan Cho Associates has no lender overlays on government and conventional loans. We are also experts in originating and funding non-QM mortgages and alternative portfolio lenders.
Non-QM lenders were anticipating skyrocketing growth in the years to come. However, the COVID-19 pandemic completely shut down the mortgage markets on non-QM and alternative portfolio financing. The great news is that non-QM loans have been making a resurgence in the past couple of months.
To qualify for a mortgage with a lender with no lender overlays and experts in alternative financing, please get in touch with us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.
Gustan Cho Associates are experts in NON-QM mortgage lending.
- We have numerous investors who offer different programs for these types of loans
- In this blog, we will detail what a NON-QM mortgage is and how to apply for one
- You will also update you on some recent document changes to NON-QM lending after the COVID-19 Coronavirus outbreak
2020 Non-QM Mortgage Guidelines UPDATE: Non-QM Loans Defined
A NON-QM mortgage loan is a special mortgage product that does not follow federal lending guidelines put forth by Fannie Mae, Freddie Mac, and HUD.
- These are private investors who are able to lend their own money, allowing them to create their own mortgage products and guidelines
- QM stands for qualified mortgage
- NON-QM simply means non-qualified mortgage
- Since they do not follow the federal guidelines, thousands of Americans are able to buy or refinance homes with these products
- At the beginning of the COVID-19 coronavirus outbreak, NON-QM mortgage products simply went away
- Investors were not honoring their loan products due to uncertainty in the market
Even the individuals who are already in the loan process were not able to close on their transactions. As of recent, NON-QM mortgage lending has made a comeback.
2020 Non-QM Mortgage Guidelines UPDATE On Relaunched Loan Programs
Popular NON-QM mortgage products after COVID-19 coronavirus outbreak
- Bank statement mortgages for self-employed borrowers
- Most self-employed borrowers use tax write-offs to increase take-home pay
- Tax code for self-employed individuals allows for many legitimate write-offs
- These write-offs count against your debt to income ratio when you attempt to buy a home
- Federal guidelines outline exactly how mortgage companies can calculate self-employed income
- Many write-offs will count against your qualifications
- If that is your scenario, a bank statement loan may be a great alternative for you
- A bank statement loan will calculate your income based on business-related deposits
- Typically, 50% of your business-related deposits will be counted as qualifying income
Currently, these mortgages require at least a 15% down payment depending on credit score. Lower credit scores will require a larger down payment.
Asset Depletion Mortgage Loan Programs
Asset depletion mortgages. While Freddie Mac does offer an asset depletion program, it is nowhere near as forgiving as a NON-QM asset depletion loan.
- Many borrowers, especially retired borrowers may have a large nest egg of liquid assets but low take-home pay
- This mortgage product allows you to use your liquid assets as qualifying income
- You may even count other income such as pension or Social Security income
- They will take your total assets and divide them by 60 months
That figure will be added as qualifying income to your mortgage file. Adding the assets will dramatically increase a borrower’s purchasing power.
Qualifying For Non-QM Home Mortgages
Applying for a NON-QM mortgage loan with Gustan Cho Associates is very similar to applying for a QM mortgage.
- Your first call Mike Gracz on (800) 900-8569 to discuss your mortgage qualifications, Mike is the NON-QM expert!
- From there, Mike will fit you into the best NON-QM mortgage product available
- You will be paired with a licensed loan officer in your state
- You will complete your application with an online link that will give your loan officer permission to verify their credit report
- Just like a QM mortgage, you will go through the preapproval process
Depending on the loan program, your loan officer will need certain documentation such as bank statements, pay stubs, tax returns, driver’s license or state ID, and more.
Once you send these items in your loan officer will complete the preapproval process. Since these loans are slightly different compared to your everyday mortgage, many times your loan officer will need to submit all of your documentation to the NON-QM investor. They will go through a quick pre-qualification process on your file. You will then be issued a preapproval letter or start the buying or refinancing process.
2020 Non-QM Mortgage Guidelines UPDATE: Gustan Cho Associates Relaunched Non-QM Loans
As you can see from this blog, NON-QM mortgage lending is coming back. Gustan Cho Associates are experts when it comes to NON-QM mortgage lending. While these programs are slowly coming back to the market, it is unlikely when they will be as aggressive as they were before the COVID-19 coronavirus outbreak. For example, the 5% down jumbo mortgage product is not available at this time. This product was incredibly popular before the pandemic. We hope to see NON-QM mortgage lending expand even further in the near future. For any mortgage-related questions, please call Mike Gracz on (800) 900-8569. Mike can also be reached via email at gcho@gustancho.com We look forward to helping you buy or refinance your next home.
