Non-QM Loans
A non-QM is a mortgage loan that uses alternate methods to verify income to qualify borrowers. The interest rates tend to be anywhere from 0.5% to 5% higher, depending on the loan terms.
Non-QM loans are often a good fit for those who have unique income situations such as self-employed borrowers, borrowers with considerable assets, real estate investors, foreign buyers, and buyers with blemished credit histories.
Non-QM Loan Benefits
The benefits of Non-QM loans include the following:
They provide mortgage funding for those with non-traditional income or financial situations.
They allow for loans up to $2.5 million.
Fixed-rate and adjustable-rate non-QM mortgages are available.
They can be made to legal entities, like family trusts, instead of just individuals.
No mortgage insurance is required on non-QM loans.
They can be used to free up cash for investments.
Non-QM cash-out refinance loans allow borrowers to take as much as $500,000 out in equity, depending on the situation.
What Documentation is Required for Non-QM Loans?
The documents required will vary greatly based on the financial situation of the applicant. In order to verify income, you can provide either personal and business tax returns or bank statements or investment account statements. Credit scores and debt-to-income ratios will be factored in.