Non-Qualified Loan

Financing with an Immigrant Spouse?

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Financing with an Immigrant Spouse?

Owning a home when your partner in life is not born in the states can pose some questions on acquisition. Questions like: “What do I need to present?” “Does it cost more?” or even “Is it possible at all?”

Yes, it may be a little difficult, but it is indeed, possible.

To begin with, you may pursue with the purchase yourself without using your spouse’s income. However, if this does not suffice, you may have to jump through a few hoops to obtain the needed financing with your spouse’s income.

Your spouse must be a legal citizen

The most important thing you need to show to the lender is your spouse’s legality in the country. You must be able to establish a document showing his or her permanent residency. In most cases, this suffices.

However, if your spouse is still not yet a permanent resident, you must instead be able to show the lender a proof that your spouse can continue to stay in the country within the next three years at minimum. If not, you must be able to show that the temporary residency will be renewed.

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How about my spouse’s credit?

Another important aspect that needs considering is your spouse’s credit history. If he or she has not been living in the country for more than three years, it is expected that he or she might not have been able to establish a credit score yet. The process of getting a FICO may take around 12 months or a year.

If your plan of getting financing is not urgent, you can work your spouse’s credit score starting now by using credit accounts that will be reported to the credit bureaus.

However, if your plan of getting a mortgage, for example, is in the near future where there is little time to build credit history for your spouse, you may utilize non-traditional credit sources that show your spouse’s creditability as a payor. This includes his or her utility bill payments, rent payments, insurance, and tuition payments, among others.

Your spouse must be able to show consistent payments without delinquencies for the past 12 months.

Income considerations

Your lender will ask for two years worth of job history from your spouse. If he or she has worked in the same industry here and in his or her country, the job history will be accounted at least, if not the income.

The bottomline

Yes, it is extra difficult to prove to the lender that you are a safe deal with an immigrant spouse as co-applicant.

If you can qualify for financing on your own, it would be a smarter idea not to include your spouse’s name on the loan. Many lenders have negative biases on immigrant applicants and that in itself may lower your chances of getting the best terms that you could otherwise get on your own.

Talk to your financial advisor to get a guided, expert advice on a better, wiser option to get around your dilemma.

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Finding Lenders for Your Multiple Properties

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Finding Lenders for Your Multiple Properties

If you are an investor looking to add another property to your portfolio, you may find it a headache to come up with financing for the new property. Most banks do not lend a fifth mortgage if you already have four in your portfolio. This makes it hard to get subsequent financing for your additional properties.

Investors can get financing for up to 10 properties per Fannie Mae. However, banks are wary of giving out these loans because they are too risky. But a little bit of patience and professional help can get you to the right people.

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Qualifications

The requirements for investors to get the financing needed for their multiple investment properties include:

  • own five to ten residential properties that are also financed
  • make a 25 percent down payment or 30 percent for properties with two to four units
  • a credit score of 720
  • no mortgage payments for the past 12 months
  • no bankruptcies or foreclosures within the past seven years
  • tax records for the last two years that show the properties’ rental incomes
  • six months of PITI reserves on each of the financed properties

Another option for investors to access financing for their multiple properties is through portfolio financing. It may be hard to find lenders that offer this type of financing product but it wouldn’t be hard to qualify once you find one.

If you are familiar with the workings of the real estate industry, you can work out your connections in order to find the right one. If you turn out empty, you can inquire from your local banks or find national lenders through a broker. A non qualified loan may also be a resort for investors who have problems with their qualifications.

Finding financing for your multiple properties may be hard but it is not impossible. Begin your search here.

Why Lenders Need Your Bank Statement

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Why Lenders Need Your Bank Statement

It’s common knowledge that lenders ask you for your financial statements and bank records when you apply for a mortgage. But what exactly do lenders do with these personal and confidential records?

Taking out a home loan is a game of risk that involves not just you but also the lenders. While you got to obtain the money to own a home, your lenders have to protect their business as well and see to it that the people they are doing business with can give back what they owe.

As a way of mitigating risk, they will require you to prove that you can, indeed, pay back the money you borrow. To do this, you will have to show them that:

  • you have a source of income; and that
  • you are a responsible creditor

Now showing that you have a job or own a business is not a guarantee that you can repay what you owe. You may lose your job in the future and therefore fail to pay your loans. Or, your business can go bankrupt and you will have no source of profit to sustain your financial responsibilities.

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This is why as a means of financial security, your lender will ask for your bank records as means of verifying your statements. These documents will provide your lenders:

a) Proof of Funds

It’s not enough that you have the money there. The lender needs to verify that these funds are legitimately yours. To do this, your lenders usually go through a month’s worth of bank statements to evaluate and verify if all the assets your declared in your loan application is really yours.

b) Proof of Legitimacy

One of the most commonly-encountered issue among mortgage applicants is the cash deposits on their bank statements. Its existence in your account does not automatically guarantee that its sources are yours. Establishing legitimacy then makes it hard for some lenders to verify your finances.

This is the reason why in some cases, lenders ask their applicants to submit statements of explanations regarding their cash deposits. This is especially relevant when your down payment is a gift from a family or relative channeled to your account. If such is the case, the transaction must be duly documented with a notarized gift letter to be honored.

Consistency in your finances is a necessity when you apply for a mortgage. See to it that you properly document your transactions or these might cause delays in your underwriting. Delays in the underwriting process means longer closing time, and most possibly, higher mortgage rates.

Find a lender that can help you get the financing you need. Start your search here.

Finding a Non-QM Mortgage Lender

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Finding a Non-QM Mortgage Lender

Finding a non-qualified (non-QM) lender today is getting more and more easy compared to the early years post the 2008 crisis. The challenge is to find the right one that understands and caters to your unique borrower needs.

After the Dodd-Frank Act split mortgage categories into qualified and non-qualified in order for lenders to be more meticulous of the loan products they offer and who they give them to, a significant portion of the borrower market were cut out off of the opportunity to get the financing they need.

These people are not necessarily subprime borrowers, but are those who might be holding two jobs or jobs by season, those who receive pay via commissions, and generally those individuals whose income may not come with regular paychecks and W2s but otherwise have good credit standing.

A non-QM loan usually takes the form of the following:

a) Interest only loans that require interest payments at the first part of the mortgage term. After this specified period, fully amortized payments are then paid.
b) Loans given to borrowers with debt-to-income ratio higher than 43 percent
c) Loans that use other methods to verify documented income
d) Loans that charge over 3 percent in origination costs

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All of the above are not allowed with FHA, VA, USDA, or other government-backed mortgage qualifications. And most people do not usually fall into this type. Hence why the non-QM market thrives.

It is of primary importance to evaluate your purpose for getting a Non-QM loan as that will help you determine which lender suits you best. Many non-QM lenders are specialists and cater to only a type or two of borrowers. Some prefer self-employed borrowers such as small-time entrepreneurs and businessmen, while others accommodate slightly risky borrowers with compensating factors.

Finding the right lender

When choosing which lender to get a non-QM loan from, you must consider a lender’s flexibility. It is the ability of the lender to flex their offers and make changes based on the nature of your situation as a borrower in need. This lender characteristic is easy to find in small, private lenders who keep their loans on their portfolio and do not sell them to secondary markets.

If such is the case, they do not have to adjust to the whims of their investors and are therefore more capable of making adjustments to their loan offers.

If you cannot find a specified non-QM lender in your area, you can try with your bank and see if they can arrange for a loan that fits your criteria. If they cannot accommodate your loan request, expand your search online.

Finding the non-QM lender to work with may require a bit of patience and extra effort, but with today’s looser mortgage guidelines, it is definitely not impossible. Start your search here.

What are the Types of Non-QM Mortgages Available Today?

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what-are-the-types-of-non-qm-mortgages-available-today

Mortgages today are classified into two categories: qualified, and non-qualified. Qualified mortgages are designed to cater to individuals who can fully demonstrate their ability to pay back a loan. But a significant part of the American population does not fall within this category. Most businessmen or self-employed individuals, as well as freelancers or those who do not receive a steady stream of income may find it hard to qualify. This is where non-qualified mortgages come in handy.

Non-qualified mortgages (Non-QM) come in different forms, and target a different segment of the housing market. Let’s look into its variety.

Interest Only Non-Qualified Mortgage Products

With interest-only loans, you pay only the interest on the loan for a specified period. After this period expires, you are then liable to pay for the interest AND the principal, which could cause your monthly payments to balloon. If you are going to take this type of loan, be sure that you are well-prepared and have money to tap into by the time the interest-only period comes to an end.

Investment Property Loans

Investment properties are treated by the housing industry as business. Hence, loans for these properties do not have to abide by the rules set by the Dodd-Frank Act. This secures the variety of the type of financing an investor or borrower can get. Different lenders may have different sets of qualification guidelines for potential borrowers.

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Loans for High Net Worth Borrowers

Banks offer big loans for individuals whose net worth are significantly high. These individuals usually do not have a consistent income but do have a significant number of assets on their name. Thus, many banks offer loans that are based on assets rather than income. These assets must be verified (in lieu of the income) in order to qualify for the loan. These asset-based loans typically loan thousands of dollars or even millions to qualified individuals. However, borrowers must be able to maintain excellent credit and put a good percentage of the loan amount as down payment.

Non-Agency Mortgage Programs

Conventional, qualified mortgage lenders will deny your loan application if your debt-to-income ratio goes beyond the 43 percent limit. This poses a problem if you are receiving irregular income or are purchasing a property with a high loan amount. Thus comes non-agency mortgage programs to your aid. Through a non-agency mortgage, you can get around the 43 percent DTI cap and secure financing for your home. However, you must be able to demonstrate to the lender that you will be able to pay back the loan. Do not take a mortgage that is more than you can afford. Make an honest evaluation of your income and prepare to deliver.

Stated Income Loans

If you are having difficulty documenting your income, but need a home loan, you can opt for stated income loans. These types of loans target self-employed individuals. For stated-income mortgages, lenders do not look at your pay stubs and W2 forms as well as your income tax records. You just need to state your income and they take your word for it. Because of this, stated income loans are deemed risky and most of them has been eliminated especially after the housing crisis hit in 2008. However, there are still versions of stated income loans that exist. One of these are asset-verified loans. Compared to some of its predecessors, they have stricter guidelines and qualification requirements.

To get asset verified loans, your asset must be reflective of your income. Moreover, you must have money on your account that is enough to cover the loan expenses should something disrupt your income flow. Qualifications depend from one lender to another. But one thing is made sure: that you can afford to pay for the loan despite vague income records, and that you will be able to pay back what you owe.

If you are looking for financing but do not fit the traditional eligibility and qualification standards required by lenders, non-qualified mortgages could be your saving grace. However, these loans are risky and there are frauds who are always ready to pounce on the unsuspecting. When you head out shopping, make a criteria for your lender, and always be on the lookout for non-credible transactions.

Find a Non-QM lender near your area today.