Non-qualified or non-qualifying loans (also known as non-QM loans) offer people a flexible form of mortgage financing. All non-QM loans tend to come with loose financial and credit requirements. Non-QM loans are ideally an excellent option for some rental property investors, self-employed borrowers, and anyone unable to meet the set standards of traditional loans. However, before you start looking for non-QM lenders near me on the internet. You must know precisely what you are signing up for. So, let’s begin by discussing what non-QM is and why you might need it.
What Is A Non-Qualifying Mortgage Loan, And Why Should You Seek It?
A non-qualifying mortgage loan is a form of financing that does not adhere to any lending standards set out by the Dodd-Frank act. These regulations were issued back in 2014 to ensure all borrowers can pay back their loans for those who don’t know. These regulations also help prevent a repeat of the subprime mortgage crisis we witnessed during the Great Recession. However, it would help if you kept in mind that all non-QM loans do not come with government backing like VA and FHA loans. As a result, they often present a more significant risk and go with a higher interest rate.
QM loans come with their own set of regulated formulas to which all mortgage providers adhere. If you, as a borrower, do not check every box, you might not qualify for a government-insured or conventional, or guaranteed mortgage. Non-QM lenders, on the other hand, will consider several other factors which go beyond that checklist. And will look at your application from a more holistic perspective. This, in turn, will give you a better chance at qualifying for a loan.
Non-QM is a perfect choice for anyone who cannot meet a traditional mortgage loan’s requirement. Such as a 43% DTI ratio (debt-to-income ratio) or a minimum credit score. Self-employed borrowers such as freelancers often utilize such loans since they allow them to verify their income in more creative ways, rather than only via tax returns and W-2s. Hence you need to figure out if you need a non-QM loan. A few people who might benefit significantly from a non-QM loan include:
- Low-credit borrowers
- Self-employed gig workers, professionals, and freelancers
- Borrowers with nontraditional income, such as individuals living on investment proceeds
- Borrowers who have high debt-to-income ratios
Pros and Cons of Non-Qualifying Mortgage Loan
Now that you know what non-QM loans are, you must remember that before you start looking for non-QM lenders near me online. You should know all the pros and cons that come with them. The most significant advantage of selecting a non-QM loan is that it can open a door of opportunity to all borrowers who might not qualify for a traditional mortgage otherwise. They are a perfect mortgage funding solution for all hardworking. But underserved individuals such as self-employed individuals and small business owners who work hours to achieve success but cannot qualify for a government-insured or guaranteed mortgage.
Non-qualifying mortgages also require much less formal documentation than other traditional loans. Most non-QM lenders will not ask you for things like tax returns, W-2s, or any employment verification letter for these mortgages. However, they will require additional forms of income verification to have a clear picture of your financial status.
Flexible Payment Terms
You must also know that non-QM loans come with flexible payment terms. You can choose from several payment options, such as a 40-year loan or a balloon payment option, which are not available for most qualified mortgages. However, even non-QM loans come with a few downsides, like all good things. These loans tend to arrive at a higher interest rate and many costly fees upfront. They are also not as readily available as other traditional loans.
If you are looking for non-QM lenders near me, it would be best to contact a professional real estate agent to help you find the best option for you. Since not all money lenders offer non-QM funding, the easiest way for you to land a perfect funding solution is by partnering with a professional from Real Estate Funding Solutions. Our mortgage brokers are your best bet. Because we have access to dozens of money lenders and can easily shop for non-QM funding solutions on your behalf.
Need Help With Your Subsequent Real Estate Financing? Real Estate Funding Solutions Can Help.
Have you been looking for non-QM lenders near me online but are unhappy with the results? Do you want to make real estate funding easy while ensuring long-term profit? The Real Estate Funding Solutions team can guide you throughout the home buying process. At Real Estate Funding Solutions, our goal is to ensure all our clients get maximum profit from their real estate transactions. If you have any questions regarding non-QM loans or seek expert advice on your next home purchase, call us at 855-913-8637 today!