If you have applied for a traditional or conventional loan and been denied approval you are not alone. In fact, there are many borrowers that are perfectly capable of repaying a loan that doesn’t quite fit the parameters of these types of mortgage loans. If you find yourself unable to obtain a conventional mortgage loan due to credit, property, income, type of employment, and more then, a non-QM mortgage could be a good alternative route.
First, let’s explain what a non-QM mortgage is
A non-QM mortgage is a mortgage that gives an opportunity to borrowers that have a more unique way of qualifying for a mortgage outside of the conventional and traditional home loan requirements. It provides a way for those who may not meet all of the most common mortgage loan requirements to secure financing for a home purchase.
A traditional or conventional loan is one that sticks within the parameters set by Fannie Mae and Freddie Mac for qualifications in order for them to be federally backed. This does not mean any lender however cannot set their own parameters for giving out a loan. What it does mean when a lender chooses to do this is that they continue to hold onto the loan or find their own investor to take it off their hands. Non-QM stands for nonqualifying meaning that it does not qualify for the parameters set for traditional conventional loans.
There are many different non-QM mortgage programs out there some of the most common are:
Bank statement loans
Hard money loans
Certain types of real estate investment loans
Some jumbo loans
Loans allowing a purchase with cryptocurrency
Portfolio loans
Loans for unique properties
Tips for finding and obtaining non-QM mortgages
First, hire a mortgage broker
The best thing you can do when you are searching for mortgage possibilities that are outside of the traditional box is to hire a mortgage broker. More importantly, a mortgage broker that focuses on working with non-QM mortgages.
A mortgage broker shops around for the best mortgage products available to you after taking time to ask you questions about your personal financial situation. They will not find the first loan available for you, rather shop around to make sure they are offering you the best choices possible for your personal goals and needs.
Using someone that specializes in finding these types of loans will help you to find the specific specialized non-QM loan that will work best for your personal situation. Brokers that work with non-QM loans make it their focus to know all of the current products on the market available to borrowers that need more consideration outside of traditional requirements.
Have documentation ready
Though you will not be qualifying under traditional means a lender is still going to ask for paperwork that backs up and proves your ability to pay the loan. Even though you are not seeking a traditional loan a lender is still responsible by law to verify you are more than capable to repay the loan.
What documentation you specifically will need depends on the specific type of loan you are applying for. Many non-QM mortgages will ask for a series of bank statements instead of tax returns to verify income. It is a good idea to be prepared with any documents you may possibly need even ones that you might not be asked for just so that they are handy to help the process go more quickly. If you are unsure of what documents to get ready it is a great question for your mortgage broker.
Make sure you are readily available to provide needed papers or answer questions
This one is true for every type of loan both conventional and non-QM. Many people get frustrated during the underwriting process of mortgage approval because it can take a long time. What a majority of borrowers do not realize is that this process can be sped up significantly in response time from the borrower to requests and questions made by the underwriter.
The nice thing about non-QM mortgages is that they are totally handled by the lender so the process can go very quickly as compared to a traditional conventional loan as long as a borrower is quick with their communication.
For more information on non-QM mortgage options in Mission Viejo and California please contact me anytime.
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