Many lenders offer non-QM loans today, but they are not all created equal. Some will be better equipped to assist you with Nonqualified Loans than others. If you have leverage, such as many months of reserves on hand, you have more bargaining power than a borrower with mediocre credit, a high debt ratio, and very few reserves. However, this can also make you a target for scams and other illicit ploys to get you to pay more money. It always helps if you have a couple of options and see what each one offers for your exact circumstances.
Nonqualified mortgage loans are a relatively new product. That said, you’ll want to look for a lender that not only offers such but is well qualified to do so. You may come across small firms that claim to specialize in non-QM loans at really enticing rates. When the offer is too good to be true, that’s when you need to be extra cautious. Once you’ve narrowed down your prospects, do a background check. Go beyond those company websites. Visit forums, social media groups and other resources where you can find independent and unbiased information on a particular lender.
Lenders who originate non-QM loans have basically the same responsibilities as those who offer other mortgage products, except perhaps that they focus more efforts on ensuring that a borrower’s financial resources are sufficient enough to cover the subsequent cost of the loan.
Lenders basically look for compensating factors when accepting loans outside of the realm of the QM guidelines. For example, if you have a debt ratio that exceeds 43%, yet you have 24 months of reserves and a high credit score, you will likely qualify for a loan, but won’t fall under the QM protection. Certain lenders are willing to take have you approved for a loan as you do not pose the same level of risk as someone that has a low credit score and very few reserves. This type of borrower would normally require a higher interest rate and/or fees and be very likely to default on their loan. Between the two borrowers, most lenders would be willing to take the chance on the non-QM borrower with the higher credit score and higher debt ratio as the likelihood of that borrower taking legal action in the face of default is much lower than the borrower that did not demonstrate a strong ability to repay the loan.
Tips to Finding the Right Lender
#1 Take your time
The first step to finding the right lender is a free quote. You could potentially end up wasting a lot of money by rushing into a lender or loan program. Take your time when you’re comparing lenders and find the one that best matches your needs.
#2 Think about what you want
When shopping for a non qualified mortgage based on a lender’s guidelines, think about what matters to you? We all know the end goal is to have house, but what do you want to achieve specifically with a non-QM loan. Do you want to get the lowest interest rates possible? Do you want an amortization that’s flexible? Keep in mind that lenders have different guidelines for things like these, making it even more important to shop around for one that offers what you want.
#3 Be patient and do the research
Don’t feel you need to settle on a lender just because finding the right one feels like a challenge. The more experienced the lender is about the loan you’re considering, the better. Since you’re considering a non-QM loan, it’s only logical to go to a lending institution that specializes in this kind of mortgage product. You wouldn’t go to a burger joint and expect to be served authentic Mexican food. In the same manner, you want to be sure your lender is educated in the specific program as well as have a good strong track record of being able to fund that specific loan. Having an experienced lender can help save you time and money and it will help keep your loan process stress free.
#3 Don’t succumb to pressure
You’ll end up making a number of choices during the course of a home loan application. However, the best thing about that it is always your choice to make. Don’t let a lender make you feel pressured into choosing a certain loan program or interest rate, especially if you feel it doesn’t match your demands and financial needs. The loan program you choose is your choice, the lender you choose is your choice, and the house you choose is your choice, so don’t ever let anyone tell you differently and don’t settle for less.
It’s very important to select the right lender because paying for a home will have quite an impact on your finances over a considerably long period of time. Applying the tips could ultimately save you time and thousands of dollars in the long run. Don’t ever feel rushed or pushed into a loan if you don’t feel the options aren’t right for you and don’t settle for a lender. Find one who is going to help you, not make things worse.
Get Matched with the Right Lender
Are you ready to start your lender search? You can start right here, right now. We can help match you with a qualified lender who can help answer any questions you may have regarding the home loan process and they can even help you get started with your home loan application. Keep in mind, not every lender will offer the same programs, rates, or have the same qualifications. This is why it’s important to shop around to find the best deal that fits your needs. Click the button below and you’ll be matched with a qualified lender who can help with all your home loan needs.