What Are Non QM Loan Products?

Non QM Loan Products are home mortgage loans that are not backed by the US government, Fannie Mae, or Freddie Mac. Non QM Loan Products are home mortgage loans that are bought by private investors or held on a large banks warehouse line.

What Are Home Mortgage Interest Rates Like?
Home mortgage interest rates are going to be lower than a hard money loan but higher than your FHA, VA, Fannie Mae, or Freddie Mac loan product. Why? Anytime the lender has to incur anytime of a higher risk there is going to be a higher interest rate involved. If you are self-employed and make a lot of money and write everything off, I know what you are thinking. What are you talking about? I make more money than most people. While this is true, when it comes to home mortgage lending the underwriter is going to look at your tax returns. Unfortunately, if you write everything off it looks like at the end of the day that you don’t have any income when in reality you do. Basically, you can’t write everything off and then turn around and state you make a lot of money. So what can one do? If you would like to obtain a regular Conforming loan in the future, then make sure your business shows a profit for the past year. Make sure your income amount that is shown on your business tax return is more than the amount needed to qualify you for a home mortgage loan. For example, if your business shows an average income in the amount of $5,000 per month, you definitely won’t qualify for that million dollar home even if you have millions of dollars flowing through your company every single month. At the time this article was written if you had shown a profit for your business in the last year and your tax return was filed and filed on time, then you could apply for a Freddie Mac Conventional loan. You won’t qualify at this time for a Fannie Mae Conventional loan because Fannie Mae currently verifies your last two years tax returns. However, since guidelines change constantly, call our office for the most update loan guidelines.

What Types of Non QM Loan Products Are Offered?
As of the time this article was written, we offer Interest Only products, Bank Statement programs, and what I like to call overriding a waiting period after an event.

What’s an example of overriding a waiting period after an event? Let’s say you had a foreclosure and it’s only been recently. You really want to purchase the home but don’t qualify for a regular Conforming loan. You can override the waiting period by obtaining a NON QM Loan product. However, your down payment is going to be much greater. It is going to be anywhere from 20%-50% down. Your home mortgage interest rate is going to be higher. You will also have to pay the lender an origination fee to obtain the loan. Currently, there are only a handful of lenders that even offer the NON QM Loan Products. Therefore, you are going to be limited to the terms of the loan. The majority of the loans are 30 year fixed products. The lender wants to make sure you will be able to afford the loan especially since you can’t refinance into another loan product until the waiting period after your event has elapsed.

Interest Only Loans:
There is a separate drop down page underneath NON QM Loan Products that explains the interest only loan program. Interest only loans are not fully amortized loan products. You are only paying on the interest portion of the loan. Therefore, the total mortgage payment is going to be cheaper than a fully amortized loan product.

Bank Statement Program:
Since the bank statement program changes constantly and is a little complex, if anyone is interested you will need to call our office for the most up to date guidelines. The key component of this program is being able to show a steady stream of business revenue into your business bank account. Borrowers also need to have a decent credit score. Borrowers with a history of late payments, collections, liens, or judgments won’t work for this loan program. You will need to provide your business tax returns for the last two years and they must be filed on time or have an extension.