This guide covers refinancing non-QM to conforming loans with lower mortgage rates. Mortgage rates hit the highest in 2023 since the 2008 Housing Bubble and Credit Collapse. Mortgage rates are increasing at historic twenty-year highs despite skyrocketing home prices, out-of-control inflation, and a volatile economy. Non-QM loans remain popular and are the mortgage loan of choice due to its non-traditional loan programs, says Dustin Dumestre, a senior loan officer at Gustan Cho Associates:

Many home buyers closed on their home loans with non-qm loans at high mortgage rates. NON-QM Loans are alternative forms of financing for borrowers who cannot qualify for government and conventional loans.

Non-QM loans are becoming increasingly popular despite higher mortgage rates. Homebuyers can purchase primary owner-occupant homes, second homes, and investment properties with non-QM mortgage loans. There is no waiting period after bankruptcy or foreclosure to qualify for non–qm mortgages. Also, borrowers with late payments in the past 12 months can qualify for non-QM loans. Many borrowers of non-QM loans intend to refinancing non-QM to conforming loans at a later date. In the following paragraphs, we will cover refinancing non-QM to conforming loans with lower mortgage rates.

Mortgage Rates on Non-QM Loans

NON-QM loans have higher mortgage rates than government and conventional loans. NON-QM Mortgages is a temporary bridge form of financing for borrowers who cannot qualify for conforming loans to purchase homes in a hot real estate market.  John Strange, a senior loan officer at Gustan Cho Associates, explains about refinancing non-QM to conforming loans:

Most borrowers of non-QM loans want the simplicity of buying real estate with non-QM loans and refinancing non-QM to conforming loans at a later date when rates drop or when their financial situation stabilizes.

With the recent news that the FED will start increasing interest rates for the remainder of 2023 into 2024 to battle inflation, mortgage rates is forecasted to continue to increase pass the 8.0% rate mark for prime borrowers. With increasing mortgage rates and demand of homes increasing, non-QM loans continues to become popular. Any mortgage rate correction, you will see a flood of refinancing non-QM to conforming loans.

NON-QM Mortgage Interest Rates

Home prices have been rising for the past several years. Due to rising home prices, the Federal Housing Federal Agency and HUD have increased conforming and FHA loan limits for the past seven years. Mortgage interest rates have hit an all-time high in 2023 since the 2008 Great Recession.

Many home buyers with a recent bankruptcy or housing event had the opportunity to purchase their homes with non-QM loans. With the Federal Reserve Board announcing they are not done increasing interest rates for the remainder of 2023, mortgage rates hit a 20-year high.

Industry experts and economists predict lower mortgage rates for 2024. With mortgage rates sliding, this is a great opportunity for borrowers refinancing NON-QM to conforming loans. Many non-qm borrowers have 11% to 12% mortgage rates. Many non-qm borrowers have worked on their credit since closing their non-qm loans in 2018. 

Qualifying For Mortgage With a Lender With No Overlays

Most non-qm borrowers who closed on their home loans in 2018 normally have rates between 10% to 12.9%. Mortgage rates today on prime borrowers is 7.23%. Even for non-prime borrowers with lower credit scores, rates may be as low as 6.875%. Homeowners who have closed on a non-qm loan in 2018 can benefit by refinancing non-QM to conforming loans. All closing costs can be rolled into the loan, so there is no money out of pocket. Refinancing non-QM to conforming loans allows borrowers to skip up to 2 months’ mortgage payments. Please contact us at Gustan Cho Associates to explore the net tangible benefit of Refinancing NON-QM to conforming loans at 800-900-8569 or text us for faster response. Or email us at alex@gustancho.com. The team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays.