You might be a candidate for a NON-QM loan, or Non-Qualified Mortgage Loan, if you do not meet the strict Consumer Financial Protection Bureau's (CFPB) mortgage loan conditions. This type of loan is designed for some rental property investors, borrowers that are self-employed, and those who do not meet conventional loan standards. Stratton Equities can also fit self-employed borrowers into the QM space.
It is also an option for borrowers who have had challenges qualifying for a QM-loan due to credit issues (such as bankruptcy, foreclosures, late payments, or other isolated credit issues) in the past or have an unconventional source of income.
Unlike the traditional income verification mandated for most loans, this type of mortgage loan allows you to be eligible based on alternative methods. NON-QM loans create real estate investment opportunities for a wider array of people due to their more versatile qualification criteria.
A qualified mortgage loan is an “agency” mortgage-backed security. On the other hand, a Non-Qualified Mortgage Loan–considered “non-agency” or “private-label”–is suitable for borrowers with exceptional circumstances or those whose incomes differ from month to month.
Many individuals, including hospitality employees, self-employed business owners, and retirees have fluctuating earnings. This is where NON-QM fills the void by offering dynamic underwriting measures for prudent borrowers with special income conditions.
A prevalent belief is that NON-QM loans are "bad loans" in disguise, and therefore not recommended. The reality is that these kinds of loans have their own set of rules related to QM loans to ensure that NON-QM lenders and borrowers are protected from a high-risk loan. The process of lending NON-QM loans is very similar to that of QM loans, only with a different collection of documents during application.
What is the Difference between a QM and NON-QM Mortgage?
The biggest difference between a QM (Qualified mortgage) and NON-QM Mortgage, is that a QM Mortgage loan tends to be traditional government-backed loans and conventional loans.
Because a conventional loan (QM) is usually processed through a bank or traditional financial institution on an owner occupied property, a NON-QM with a private lender is the best solution for a real estate entrepreneur looking to purchase an investment property.
A NON-QM or NON-Qualified mortgage loan is typically portfolio loans for real estate investors that do not conform to the strict government or conventional mortgage guidelines.
Why Should Borrowers Choose NON-QM Loans on their Real Estate Investment?
Unlike conventional investment property loans that max out at 70% LTV, a NON-QM Mortgage Program maxes at 85% LTV and with no PMI with rates starting at 4.375%. This allows the borrower to put less money down on their purchase, typically loan amounts range between $100,000 and $5,000,000.
How can a Real Estate Investor Qualify for a NON-QM Loan?
If you are a real estate investor that has an investment property and are looking for a quick turnaround without stringent guidelines, NON-QM loans may be better for you -- NON-QM loans do not need to abide by these strict guidelines! Bottom line = This means that NON-QM lenders like Stratton Equities, can provide faster service and approval to more types of real estate investment opportunities.
Private lenders who utilize QM loans must first qualify a mortgage borrower’s income, liabilities, and monthly debt payments to determine whether the borrower can successfully pay back the loan in the future. To successfully qualify for a QM loan, real estate investors must fit the strict requirements set by the Consumer Financial Protection Bureau. This approval process requires borrowers to submit extensive documentation concerning their credit history, income, assets, and monthly debt payments, which usually takes well over a month to complete.
NON-QM and Private Money lenders understand that everyone’s situation is different and that to a traditional financial institution (like a bank) some borrowers may not present like a qualified candidate for a loan. This restriction could be due to the borrower's employment status, income, credit history, and liquid asset requirements - however with a non-qualified mortgage, private lenders focus on; high credit score, investing experience, and liquid assets.
As a result, NON-QM loans’ lax restrictions make them ideal for these types of real estate investors:
Self-Employed Investors: Especially in light of the unprecedented year, with COVID-19, we completely understand how difficult it is to find steady income. Fortunately, we here at Stratton Equities specialize in NON-QM Loans and asset based loans. This means that you do not need to show us your income! We base our loans on the value of the property itself or the borrower’s credit score and liquid assets.
Foreign Nationals: Government backed loans typically require proof of a US Social Security number or a W2 (which is a US tax form). Because NON-QM loans don’t have such requirements, they are ideal for foreign nationals who are in the States on a visa and are looking to invest.
NON-QM Loans: The Benefits For Borrowers
The key benefit of NON-QM loans is that they offer opportunities to borrowers who would not otherwise meet the mortgage requirement. Non-Qualified Mortgage Loans provide much-needed loan financing for millions of hard-working Americans, including self-employed people and small-business owners who have worked hard to achieve success but are not eligible for QM loans.
Below are some of the benefits Stratton Equities’ NON-QM loans offer to borrowers:
Looser, more versatile underwriting and guidelines
Ability to close faster than a QM loan
Ideal for 1-4 family investment properties
NO-DOC Mortgage Loan: Does not require income verification or tax returns
Self-employed people are top candidates for NON-QM loans
For specific borrowers with unique income sources or a high DTI, a NON-QM loan will enable them to obtain the money they need. NON-QM lenders also set standards for Non-Qualified Mortgage Loan borrowers and need to determine their potential to repay.
This type of mortgage loan is ideal for a wide variety of potential borrowers and can be used to buy commercial and investment assets. It is advisable to contact a certified loan officer to determine your qualification for a NON-QM loan, so they can review your profile to ascertain if this product is perfect for you.
Why Should Real Estate Investors Work with Stratton Equities?
Stratton Equities is the leading hard money and NON-QM mortgage lender for real estate investors in the United States. With the largest library of NON-QM mortgage loan programs under one roof, we here at Stratton Equities pride ourselves on tailoring the perfect mortgage loan options for each individual client’s needs nationwide.
We also understand how important your time is - as opposed to banks who broker your loan application out to other banks to waste time, our loan officers can get back to you with your pre-approval for a loan within 24 hours.
As a direct hard money lender, Stratton Equities and our team of expert loan officers will help guide you through our expedited loan approval process, finishing weeks before our traditional competitors. No Junk Fees! No Upfront Fees! No Tax Returns!
At Stratton Equities, we work directly with real estate investors and help them fulfill their real estate entrepreneurial goals. Whether you’re an experienced borrower or a first time investor, we understand how daunting and complicated it must be to try to enter this competitive field. But don’t worry! All we really ask of our clients is determination and commitment to their projects. No expertise needed. Welcome to your one-stop shop for all your real estate investment loan needs!
How Stratton Equities Can Help
When you’re ready to explore NON-QM loan options, contact Stratton Equities. Our diversity of programs, lowest private money rates (starting at 4.75%), professional team, and quick loan approval process make us the nation’s leading direct hard money and NON-QM lender for real estate investors.
If you’d like to learn more about our library of mortgage loan programs, click here to explore our website. Have a property in mind and would like to get pre-qualified? Apply Now and we will get back to you within 24 hours.
If you have an investment property and wish to speak with one of our Loan Officers, call Stratton Equities at 800-962-6613, email us, or apply for loan pre-qualification today!
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