As the mortgage industry tightens in 2022, lenders have really been forced to expand their non-QM offerings. Non- QM loan products allow you to tackle unique loan scenarios so you can qualify more borrowers. There are lots of different non-QM products out there, getting started with them can be confusing. Here are some of the biggest niches we see in the non-QM world and how to apply it to your business.
Increase your business with Bank Statement Loans
Many self-employed or contract employee borrowers cannot qualify for a mortgage based on their personal and/or business tax returns. A bank statement loan program solves this problem by allowing you to use the borrower’s personal or business bank statements to qualify instead or tax returns.
Like most Non-QM lenders, we offer a 12-month or 24-month bank statement program. The deposits generated from the business are added up from the bank statements. A standard 50% expense factor is used, meaning that half of the deposits are used to determine the monthly income and determine your borrower’s DTI. The 50% expense factor can be reduced by getting an expense factor letter or Profit and Loss statement from the borrower’s licensed tax preparer. Where NP, Inc. is unique, we allow for an expense factor as low as 10% with an expense factor letter or Profit and Loss statement.
If your borrower happens to get paid on a 1099, you use the 1099’s for one or two years and avoid collecting all of the bank statements. Using 1099 income instead of bank statements has a standard 10% expense factor allowing you to use more of the borrower’s income for qualification.
Increase your business with Debt Service Coverage Ratio Loans
A Debt Service Coverage Ratio (DSCR) loan allows borrowers to qualify for the purchase or refinance of an investment property based on the future rental income of the property. The debt service ratio is the rental income from the property divided by the PITIA (principle, interest, tax, insurance, and association fee) payment. For example, if the monthly rent is $1500 and the PITIA is $1500, then the DSCR would be 1 to 1. At NP, Inc. we allow DSCR as low as .75% of the monthly payment.
Some Non-QM lenders, including us here at NP, Inc offer a version of this program called “No Ratio DSCR” loan program; which allows you to go below a .75% DSCR. NP, Inc. also offers another version of our DSCR loan program called our DSCR Mixed Use program. With this program, borrowers can purchase or refinance residential investment properties from 5-10 units. The program also allows for the financing on mixed use properties of 2-8 units. A mixed-use property is a property that is a combination of residential rental units and commercial space such as a restaurant, convenience store or beauty parlor.
Increase your business with Foreign National Loans
A Foreign National loan allows a borrower that is not a US citizen to finance properties in the United States. Foreign National products come in a lot of different shapes and sizes. They can be used to purchase or refinance typically a second home or investment property. They also typically do not require US credit scores. Here at NP, Inc, we allow for credit reference letters from creditors in their home country in lieu of US credit. Borrowers can qualify for the loan using full documentation of their income, which can be satisfied with a letter from their employer. Borrowers can also qualify for investment properties utilizing our Debt Service Coverage Ratio program. For borrowers with substantial assets, they can qualify for the mortgage using our Asset Utilization loan.
In the non-QM mortgage world, the possibilities can feel limitless and the guidelines can feel overwhelming. Just remember we’re always here for you. If you have a scenario you’d like to inquire about please contact us at NP, Inc today!
Author:
Mike Pemberton
Account Executive
Email:Mpemberton@NPIncTPO.com
Phone:727-992-1959
Mobile:727-992-1959
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