This approval procedure typically takes more than a month to complete and involves borrowers to submit substantial evidence regarding their credit history, income, assets, and monthly debt payments. Real estate investors must meet the stringent criteria established by the Consumer Financial Protection Bureau in order to be approved for a QM loan. To evaluate if a borrower can successfully repay the loan in the future, private lenders who use QM loans must first qualify the borrower's income, liabilities, and monthly debt payments. NON-QM loans can be a better option for you if you're a real estate investor with an investment property and require a speedy turnaround without strict rules these loans are exempt from these rules! The bottom line is that NON-QM lenders, including Stratton Equities, can now approve additional sorts of real estate investment transactions more quickly. How Does a Real Estate Investor Meet the Requirements of a NON-QM Loan? As a result, the borrower can make a smaller down payment on their purchase average loan amounts range from $100,000 to $5,000,000. Why NON-QM Loans are Perfect for a Borrower’s Real Estate Investment?Ĭontrary to traditional investment property loans, which have a maximum LTV of 70%, a NON-QM Mortgage Program has a maximum LTV of 80%, has no PMI, and has rates as low as 7.46%. The greatest option for a real estate entrepreneur wanting to buy an investment property is a NON-QM with a private lender because a conventional loan (QM) is often performed through a bank or traditional financial institution on an owner-occupied property.įor real estate investors, a NON-QM or non-qualified mortgage loan is often a portfolio loan that does not meet the strict government or conventional mortgage criteria. The main distinction between a QM (Qualified Mortgage) and a NON-QM mortgage is that a QM mortgage loan is more likely to be a conventional loan with government backing. What Sets a QM Mortgage Apart from a NON-QM Mortgage? The application process for NON-QM loans is largely similar to that for QM loans, with the exception of the documentation required. The truth is that these loans are subject to a different set of regulations than QM loans in order to safeguard NON-QM lenders and consumers from high-risk loans. There is a common misconception that NON-QM loans are "bad loans" in disguise and should not be used. By providing dynamic underwriting criteria for responsible borrowers with unique income requirements, NON-QM bridges the gap in this situation. Many people experience wage fluctuations, including pensioners, self-employed business owners, and those working in the hospitality industry. It is referred to as "non-agency" or "private-label." A Non-Qualified Mortgage Loan, in contrast, is appropriate for borrowers with unique circumstances or those whose salaries fluctuate from month to month. Because they have more flexible qualifying requirements, NON-QM loans give a wider range of people the chance to invest in real estate.Īn "agency" mortgage-backed security is a qualified mortgage loan. This form of mortgage loan allows you to be eligible based on alternate ways as opposed to the usual income verification required for the majority of loans. Self-employed borrowers can also fit into the QM space with Stratton Equities.īorrowers who previously struggled to qualify for a QM loan because of credit concerns (such as bankruptcy, foreclosures, late payments, or other isolated credit issues) or have an unusual source of income may also consider this alternative. These borrowers are those who own rental properties, are self-employed, or do not otherwise qualify for a conventional loan. If you don't meet the tight mortgage loan requirements of the Consumer Financial Protection Bureau (CFPB), you can be a candidate for a NON-QM loan, also known as a Non-Qualified Mortgage Loan.
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