In this blog, we will discuss and cover refinancing non-QM loans to government and conventional mortgages. Refinancing NON-QM loans to government or conventional loans is possible after the initial home mortgage closing. This only holds true if the deal makes sense. Homebuyers who initially closed on their home loan with a non-QM loan at a high rate, can always refinance their non-QM loan to government or conventional loans anytime when they are ready. The borrower needs to get a net tangible benefit in order for the loan officer to be able to refinance the borrower. NON-QM Loans are not always for borrowers with bad credit. Many home buyers who need higher-end mortgages due to surpassing loan limit requirements often opt for non-qm loans rather than Jumbo Mortgages.

Non-QM Versus Traditional Mortgages

NON-QM Mortgages have many favorable terms and are easier to qualify than traditional jumbo mortgages. Borrowers can qualify for non-qm jumbo mortgages with a 10% to 25% down payment with no private mortgage insurance. Self-employed borrowers can qualify for bank statement loans with no maximum loan limits and no income tax returns required. In this blog, we will discuss and cover refinancing non-QM loans to government and conventional mortgages.

There are many benefits of non-qm mortgages. NON-QM loans are becoming increasingly popular for homebuyers with less than perfect credit, buyers with late payments in the past 12 months, buyers with not enough seasoning after bankruptcy or housing event, buyers who need higher loan limits, and self-employed borrowers.

In some cases, refinancing non-QM (non-qualified mortgage) loans into conventional mortgages might be a prudent financial decision for consumers.

Loans that don’t fit the criteria for qualifying mortgages established by the Consumer Financial Protection Bureau (CFPB) are referred to as non-QM loans. They are frequently utilized by borrowers who would not fit the requirements of regular lending because of things like income from self-employment, high debt-to-income ratios, or unusual financial circumstances.  The following are some justifications for why borrowers might think about converting non-QM loans into conventional mortgages.

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Reduced Interest Rates

Generally speaking, traditional mortgages have lower interest rates than non-QM loans, particularly if the borrower’s financial status has improved since taking out the original loan. During the course of the loan, refinancing can save much money. 

Better Financial Profile

Since taking out a non-QM loan, borrowers previously affected by high debt-to-income ratios or self-employment may have seen an improvement in their financial standing. They might be qualified for a conventional mortgage with better terms and conditions. 

Stability and Predictability

Borrowers can feel stable and at ease with traditional mortgages, which typically have set interest rates and consistent monthly payments. More financial assurance may be available through refinancing from a non-QM loan with adjustable rates or interest-only periods. 

Access to Government-backed Programs

By refinancing into a standard mortgage, borrowers may take advantage of government-backed programs with more benevolent conditions and lower down payments, such as Federal Housing Administration (FHA) or Veterans Affairs (VA) loans. 

Decreased Documentation Requirements

Non-QM loans frequently call for a large amount of documentation to validate assets and income. Refinancing into a standard mortgage could involve less paperwork and hassle, particularly for borrowers with simple financial circumstances. 

Simpler Qualification

Traditional mortgage lenders usually have stricter underwriting standards than non-QM lenders. A borrower may find it simpler to qualify for a conventional mortgage if their financial status has improved, which could result in cheaper fees and closing expenses.  But before deciding, borrowers must carefully weigh the advantages and disadvantages of refinancing. Closing fees are associated with refinancing and may counterbalance the interest rate savings. Borrowers should also consider how it affects their credit score and general financial status. 

Benefits of Taking Non-QM Mortgage Versus Other Loan Program

Non-QM and alternative loan programs benefit homebuyers who cannot qualify for a traditional government or conventional loan. Many homebuyers would miss out of the bullish housing market if they could not have gone with non-QM loans. Here are the benefits of non-QM and alternative financing: There is no waiting period after bankruptcy or housing event.

Borrowers can qualify with late payments in the past 12 months. Borrowers with credit scores down to 500 FICO can qualify. Self-employed borrowers can qualify with no income tax returns required.

The maximum loan limit is $3 million: Higher loan limits available on a case per case basis. There is no private mortgage insurance required on all non-QM loans. NON-QM loans are not just for borrowers with bad credit. Many home buyers with good credit can benefit by this loan program. This holds true for high credit self-employed borrowers where there are no income tax returns required. Gustan Cho Associates offers 10% down payment Jumbo loans and non-QM jumbo mortgages. 720 credit scores are required on traditional and non-QM 90 LTV jumbo mortgages.

Borrowers Benefiting From Refinancing NON-QM Loans To Traditional Mortgages

NON-QM Mortgage Rates are typically much higher than government and conventional loans. This holds true for borrowers with lower credit scores and higher loan to values. Many non-QM borrowers have mortgage rates in the 6% to 9% range. Many who closed their home loans with a non-QM mortgage often worked on their credit profile where they can qualify for traditional loans. Prime mortgage rates for prime borrowers today is hovering around 3.25%.

Refinancing non-QM Loans After Initial Home Closing

Homeowners can refinance their non-QM loans anytime after the initial closing of their home loan. There is no waiting period to refinance non-QM loans to other loan programs. Borrowers with higher non-QM mortgage rates can definitely benefit by refinancing non-QM loans to government and/or conventional loans. Gustan Cho Associates are experts in non-QM, government, conventional, and alternative financing loan programs.

Expert Mortgage Lender With Competitive Mortgage Rates

Gustan Cho Associates are experts in helping homeowners with high non-QM mortgage rates refinance to a lower rate traditional loan. We make sure the borrower has a net tangible benefit when refinancing non-QM loans to a government or conventional loan. The team at Gustan Cho Associates is extremely competitive on mortgage rates.  We are experts in helping borrowers save money by refinancing them to a loan program that greatly benefits them. For more information on refinancing non-QM loans to traditional lower rate mortgages please contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates Mortgage Group is available 7 days a week, including evenings, weekends, and holidays.