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What Is a Non QM Loan?

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Do you need a loan but don't meet the qualifications for a traditional mortgage? You may be wondering what is a Non QM Loan. A Non QM Loan, or "non qualified mortgage," is a type of loan that is designed for borrowers who don't meet the requirements for a traditional mortgage. This type of loan can be a great option for people who have been denied a mortgage or have bad credit. In this blog post, we will provide an overview of what Non QM Loans are and how they work. We will also discuss the benefits of using this type of financing!

What Is a Non QM Loan Table of Contents

What Is a Non QM Loan?

How Do Non-QM Loans Work?

What’s The Difference Between Subprime and Non-Qualifying Mortgages?

What is the CFPB?

What are the Qualified Mortgage Standards?

What Are Some Examples of Non-QM Loans?

How Can I Get a Non-QM Loan?

What Are The Risks of a Non-QM Loan?

Why Would I Want to Get a Non-QM Loan?

Are There Any Benefits to a Non-QM Loan?

What Is the Difference Between QM and Non-QM Mortgage?

Who Are the Top Non Qualified Mortgage Lenders?

What Additional Fees Come With Non GM Loans?

What Are the Risks of a Non-QM Loan?

What Is a Non QM Loan?

A Non QM Loan, or "non qualified mortgage," is a type of loan that is designed for borrowers who don't meet the requirements for a traditional mortgage.

This type of loan can be a great option for people who have been denied a mortgage or have bad credit. In this blog post, we will provide an overview of what Non QM Loans are and how they work. We will also discuss the benefits of using this type of financing!

There are several reasons why you might not qualify for a traditional mortgage. Maybe you've had some financial difficulties in the past, such as bankruptcy or foreclosure.

Or maybe you're self-employed and don't have the traditional income verification that lenders typically require. Whatever the reason, if you don't qualify for a traditional mortgage, a Non QM Loan could be the right solution for you.

How Do Non-QM Loans Work?

Non-QM loans are designed for borrowers who may have difficulty qualifying for a traditional mortgage. These loans typically have looser credit requirements and may allow you to qualify with a lower credit score. Non-QM loans also tend to have higher interest rates and fees than traditional mortgages.

What’s The Difference Between Subprime and Non-Qualifying Mortgages?

Subprime mortgages are loans that are made to borrowers with poor credit. Non-QM loans are loans that don't meet the Qualified Mortgage standards set by the CFPB.

What is the CFPB?

The CFPB is the Consumer Financial Protection Bureau. This government agency was created in response to the financial crisis of 2008. The CFPB's mission is to protect consumers from unfair, deceptive, or abusive practices by lenders.

What are the Qualified Mortgage Standards?

The Qualified Mortgage standards are a set of rules that were created by the CFPB in 2013. These standards define what types of loans can be considered "qualified mortgages." In order to be considered a qualified mortgage, a loan must meet certain requirements regarding things like fees, interest rates, and repayment terms.

What Are Some Examples of Non-QM Loans?

There are a few different types of non-QM loans that you might be able to qualify for. Some examples include:

Alt-A Loans

These are loans that are made to borrowers with good credit but who don't have traditional income verification.

Interest-only Loans

These loans allow you to make payments only on the interest for a certain period of time. After that, you will need to start paying off the principal as well.

Negative Amortization Loans

These loans have low monthly payments at first, but the amount you owe grows over time because you're not actually paying off any of the principal.

Portfolio Loans

These loans are made by lenders who keep the loans in their own portfolio instead of selling them to investors.

Interest-only Loans

These loans allow you to make payments only on the interest for a certain period of time. After that, you will need to start paying off the principal as well.

Balloon Payment Loans

These loans have low monthly payments but require a large balloon payment at the end of the loan term.

Loans With Terms Longer Than 30 Years

Traditional mortgages typically have terms of 30 years or less. Non-QM loans may have terms that are longer, such as 40 or 50 years.

How Can I Get a Non-QM Loan?

If you're interested in getting a non-QM loan, the best place to start is by talking to a mortgage lender. Not all lenders offer non-QM loans, so it's important to shop around and compare your options. Be sure to ask about things like interest rates, fees, and repayment terms before you agree to anything.

What Are The Risks of a Non-QM Loan?

Non-QM loans come with more risk for both the borrower and the lender. For borrowers, they may have difficulty making payments if their financial situation changes. For lenders, they may be left with a property that is difficult to sell if the borrower defaults.

Why Would I Want to Get a Non-QM Loan?

There are a few reasons why you might want to consider getting a non-QM loan. First, if you have been denied for a traditional mortgage, a non-QM loan could be an option for you. Second, these loans can sometimes offer more flexible terms

Are There Any Benefits to a Non-QM Loan?

Despite the risks, there are some benefits to non-QM loans. These loans can give borrowers access to financing that they would not otherwise have. They can also offer more flexible terms, such as longer loan terms or interest-only payments.

Before you decide to get a non-QM loan, make sure you understand the risks and benefits. Talk to a mortgage lender to see if this type of loan is right for you.

What Is the Difference Between QM and Non-QM Mortgage?

The main difference between a QM mortgage and a Non-QM mortgage is that with a QM mortgage, the lender is protected by what's called the "ability-to-repay" rule. This rule says that the lender must make sure that the borrower has enough income to make the payments on their loan. With a non-QM mortgage, there is no such rule. This means that lenders are taking on more risk when they give out these loans.

Another difference between these two types of loans is that QM mortgages have stricter requirements in terms of things like fees and interest rates. Non-QM mortgages may be more expensive for borrowers as a result.

Who Are the Top Non Qualified Mortgage Lenders?

Some of the top non qualified mortgage lenders include JMAC Lending, Freedom Mortgage, New American Funding, and Caliber Home Loans. These lenders all offer a variety of non-QM products that can meet the needs of different borrowers.

When shopping for a non-QM loan, it's important to compare interest rates, fees, and repayment terms from multiple lenders. This will help you find the best deal for your situation.

If you're interested in getting a Non-QM loan, the best place to start is by talking to a mortgage lender. Not all lenders offer Non-QM loans so it’s important to shop around and compare your options. It’s also crucial to ask about things like interest rates, fees, and repayment terms before you agree to anything.

What Additional Fees Come With Non GM Loans?

There are a few additional fees that come with Non QM Loans. These can include origination fees, underwriting fees, and broker fees. These fees can add up, so it's important to ask about them before you agree to anything.

When shopping for a non-QM loan, be sure to compare all of the fees from multiple lenders. This will help you find the best deal for your situation.

What Are the Risks of a Non-QM Loan?

Non-QM loans come with more risk for both the borrower and the lender. For borrowers, they may have difficulty making payments if their financial situation changes. For lenders, they may be left with a property that is difficult to sell if the borrower defaults.

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About Jermaine Hagan (The Plantsman)

Jermaine Hagan, also known as The Plantsman is the Founder of Flik Eco. Jermaine is the perfect hybrid of personal finance expert and nemophilist. On a mission to make personal finance simple and accessible, Jermaine uses his inside knowledge to help the average Joe, Kwame or Sarah to improve their lives. Before founding Flik Eco, Jermaine managed teams across several large financial companies, including Equifax, Admiral Plc, New Wave Capital & HSBC. He has been featured in several large publications including BBC, The Guardian & The Times.

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