Non-Qualified Mortgage Loans
Learn more about Non-Qualified Mortgage Loans.
Have you been denied a home loan or refinance in the past?
You might be a great candidate for a Non-QM loan.
Who is a good candidate for a Non-QM Loan?
> Self-employed borrowers
> Real estate investors
> Foreign nationals
> Prime borrowers
> Near or non-prime borrowers
Contact us today at (800) 883-5615 for a free consultation.
WHAT IS A NON-QM LOAN?
A non-QM loan is any loan product that doesn’t meet the standards of a qualified mortgage.
The difference is that non-QM lenders have more flexibility in underwriting guidelines to work with borrowers whom “vanilla” lenders deem too risky, says Raymond Eshaghian, president of GreenBox Loans in Los Angeles. “We deal with complex borrowers and use alternative evaluation and analysis to [underwrite them],” Eshaghian says.
Although the non-QM label might seem mysterious — even scary — to some borrowers, these loans are not like the Alt-A/subprime loans doled out prior to the housing crash, says Mike Fratantoni, chief economist with the Mortgage Bankers Association.
“Consumers should understand that every loan made today is subject to the ability-to-repay rule; non-QM loans just have a different way to get there,” Fratantoni says, adding that lenders have to jump through more hoops to qualify non-QM borrowers.
It starts with running all applicants through an automated system to ensure they don’t already qualify for an agency loan (through Fannie Mae or Freddie Mac) or a government-insured loan, says Parkes Dibble, director of mortgage product innovation with Embrace Home Loans, based in Middletown, Rhode Island.
Non-QM loans can have higher mortgage rates than a 30-year, fixed-rate mortgage.
“Spreads can be as little as .25 percent and as much as 5 percent, depending on the terms of the transaction and the risk of the borrowers,” Dibble says. “On average, spreads are closer to 1.25 percent.”