NON-QM Home Loan Guidelines For Borrowers With Bad Credit
This BLOG On NON-QM Home Loan Guidelines For Borrowers With Bad Credit Was Written By Michael Gracz of Gustan Cho Associates Mortgage Group at Loan Cabin Inc. NMLS 1657322
NON-QM Home Loan Guidelines And How It Benefits Borrowers Who Do Not Qualify For Traditional Mortgages:
We have all heard the stories of the last second mortgage denial nightmare.
- In today’s highly regulated mortgage industry this seems to be a common trend
- With the ever-changing guidelines many loan officers are not up to date with their knowledge of guidelines
- This can cause problems throughout the entire process
- Resulting in you losing earnest money, money for inspections, and money for the appraisal
- At the end of the day you do not get your dream home and you’re out quite a bit of money
- Gustan Cho Associates have received many phone calls about last second mortgage denials due to job gaps, declining income, late payments not being seasoned
- While the loan officer is to blame, sometimes credit issues pop up during the mortgage process
- This may be a hard stop for most lenders
- Gustan Cho Associates have a whole line of NON-QM Mortgage Products that have saved the day in many occasions
What Are NON-QM Loans And NON-QM Home Loan Guidelines
A NON-QM loan program that does not follow FHA, VA, Fannie Mae, Freddie Mac, or USDA mortgage guidelines. Please check out QM MORTGAGE by the CFPB for more details on Qualified Mortgages.
- Meaning these loan programs are a bit more lenient
- While they have their own set of guidelines, the lender has the ability to make exceptions on a case by case
- Making each approval unique
Types Of Borrowers Who Benefits With NON-QM Home Loans
We can share countless success stories about NON-QM Mortgages, but here are a few:
One of the most common uses for NON-QM mortgages saving the day have to do with the Foreclosure waiting periods for QM Mortgages.
- Many borrowers do not understand the concept of foreclosure waiting periods
- This can be incredibly frustrating when a borrower realizes their foreclosure waiting period does not start the day that leave the house, but it starts the day the county decides to record the transfer on the deed
- There is no telling when the county will get around to recording the deed
- Every county is different
- When you get into some larger Counties such as Los Angeles, California or even Cook County, Illinois the process can take over a year at times
- This can increase your foreclosure waiting period over 12 months
- Meaning your two-year waiting period for a VA loan, three-year waiting period for an FHA loan, or seven year waiting period for a conventional loan may not start for months after you vacate the property
- The good news is NON-QM mortgages do not have a seasoning requirement for mortgage foreclosures
- ONE DAY AFTER A FORECLOSURE YOU CAN BUY A HOME WITH A NON-QM LOAN
NON-QM Home Loan Guidelines On Student Loans
Deferred student loans and Income Based Repayment plans (IBR) can ruin your home buying power.
- Many loan programs such as FHA loans do not allow an income-based repayment plan to be used
- Even if your student loans are deferred you still need to include a monthly payment of 1% of balance due against your monthly debt to income ratio
- While conventional loan to do allow the use of income-based repayment plans they must factor in deferred student loan payments
- VA loans do allow you to omit a deferred student loan if the loan is deferred for 12 or more months (from closing date)
- VA loans and income-based repayment plans are rarely used for DTI purposes
- This is when NON-QM loans can help many borrowers
- If your student loans are in deferment for 12 or more months, THEY WILL BE EXCLUDED FROM YOUR DTI RATIO!
- That’s right, this has saved many deals. when a loan officer who does is not up to date on STUDENT LOAN GUIDELINES your pre-qualification may not be accurate, leading to a last second denial
NON-QM Home Loan Guidelines On Self Employed Borrowers
Self Employed borrowers use NON-QM loans all the time.
- The main reason being tax returns and debt to income ratio guidelines
- Majority of self-employed Americans use tax write-offs when filing their Federal IncomeTax Returns
- While these write-offs are legal they can stand in your way from obtaining a mortgage. If you have write offs on your tax returns and are looking for a mortgage you should read our blog on BANK STATEMENT LOANS
- This is a great loan product to start building equity in a property as you file your taxes stronger for two years
Starting The Mortgage Process On Non-QM Loans
What are the steps to starting a NON-QM Loan application?
That is very simple. The process is the same as a regular loan application. You will send in the following information:
- Last 60 Days Bank Statements – to source down payment
- Last 30 Days Pay Stubs
- Last Two Years W-2’S
- Last Two Years Tax Returns
- Driver’s License
- Copy of social security card
If using a bank statement loan:
- Last 60 Days Bank Statements – to source down payment and calculate income
- Driver’s License
- Social Security Card
Then call me on 630-659-7644 and I will send you an application link!
For more information on NON-QM loans please reach out to Mike Gracz on 630-659-7644 or email me at email@example.com. I am an expert in NON-QM Lending and can answer any questions you may have!