Recently traditional mortgage rates have taken a steep climb. The steepest of those include homes that would require carrying a very high balance and second properties. Regardless conventional mortgage loans have not only increased in price but also remain a little stricter on qualifying regulations.
If you are concerned about your ability to qualify for a mortgage due to less than stellar credit, or a regular income stream that is hard to prove through tax returns you may be a great candidate to qualify for what is considered a non-qualified mortgage. These are loans tailored to help borrowers in unique situations obtain the dream of homeownership.
It is not impossible to obtain a traditional conventional mortgage loan but it has become a little bit more difficult in the past few years. According to a survey conducted by Alta Source Portfolio Solutions, the amount of non-QM loans has been on the rise. They predict that the volume of non-QM loans will increase by a whopping 400% over the year.
The definition of a non-QM loan
In the simplest of terms, a non-QM loan is a mortgage that lends out money without adhering to the standards set out in the qualified mortgage rule that is adopted by the consumer financial protection bureau. For any loan to be considered as qualified/traditional/conventional a lender needs to document a borrower’s income, employment status, credit, debts, and assets, and make sure that borrowers are able to afford to repay the loan with documented proof of checking all of the above in pre-set parameters.
“Qualified mortgages are the most standard and straightforward of all loans. Sticking within parameters set by mortgage-backing giants Fannie Mae and Freddie Mac. These are loans that will not approve different parameters to help in special and unique situations to finance the purchase of a property”, says Calgary Realtor, Greg Kennedy
Why Non-QM Mortgage Might be a Helpful Answer
With home prices increasing and mortgage rates increasing as well it can be difficult to find a mortgage that works for a buyer that they qualify to afford a home that they love. A non-qualifying mortgage allows a lender more freedom in their parameters in lending out money. Some borrowers have found themselves declined for a traditional loan and when working with an experienced mortgage broker have been able to find a loan approval with a non-qualified mortgage. In some cases, loan approval from a non-qualified mortgage has come in just a matter of days after denial from a traditional loan application.
Are non-qualified mortgages safe?
Being that lenders do not have to adhere to the rules and regulations set out for traditional conventional loans set by federal entities some wonder if these are safe loans to seek out. These loans still come with their own set of qualifying regulations and every loan in the United States still comes with the qualification of ensuring that a borrower can pay back a loan and that the lender has obtained proof that they believe the borrower is able to do so.