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Mortgage Planning That Makes a Difference

Non-QM Home Loans: How Do They Work?

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Non-QM Home Loans: How Do They Work?There are a lot of people who dream of owning a home one day, but few people have the cash to purchase a home outright. Therefore, you will probably need to take out a loan to buy a house; however, what happens if you cannot qualify for a loan with the traditional loan requirements? If you are not a W2 employee, you may need to go with a Non-QM loan. What do you need to know?

What Is A Non-QM Loan?

A Non-QM loan is a non-qualified mortgage. What this means is that you do not meet the standard requirements to qualify for a mortgage. Some of the factors that you need to meet to qualify for a traditional mortgage include meeting the necessary income requirements, having pay stubs, having a debt-to-income ratio that satisfies the lender’s requirements, and taking out a mortgage that is 30 years or less. Your fees also cannot be more than 3 percent of the value of the loan. There is a common misconception that having a Non-QM loan is bad, but that is not the case. Everyone is in a different employment situation, and a Non-QM loan could be the right move for some people. 

Why Take Out A Non-QM Loan?

There are a few reasons why you should consider taking out a Non-QM loan. First, they require less documentation than other mortgages, so you might not need to produce W2s or employment verification to qualify for a loan. You also may not have to meet strict credit score requirements. If your credit score is not the best, you can still take out a home loan with a Non-QM option.

Who Should Get A Non-QM Loan?

There are many people who should consider taking out a Non-QM loan. If you plan on applying for a home loan without proof of income, this might be the right option. Furthermore, if you are a freelancer, or if you are not a W-2 employee, this could be a solid choice. There are plenty of people who could benefit from this loan, and it is important to work with a professional who can help you.

Man Vs. Machine: Why Using a Human Mortgage Professional Is Better Than Trusting an App

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Man Vs. Machine: Why Using a Human Mortgage Professional Is Better Than Trusting an AppAre you currently house-hunting or plan to be in the near future? If you plan on using mortgage financing to pay for your home, you will soon discover that there’s no shortage of options available to you. You can meet with a local mortgage professional, apply for mortgages online and even download mobile apps that promise to set you up with a mortgage. However, is every option equal?

Let’s explore why, in the epic battle of man versus machine, you will want to place your trust in a human mortgage professional.

Human Mortgage Professionals Have Local Experience

The first and most important reason you will want to work with a human mortgage professional is their understanding of the local real estate market. While you are likely to be working with a real estate agent, your mortgage advisor is another pair of eyes-and-ears that can help to keep your home purchase on the right path. They are also working regularly with many local clients and can share insight and information that no website or app will be able to come up with.

A Human Can Appreciate Your Unique Financial Situation

Online and app-based mortgage technology is… cold. Algorithms are processing the math and other hard facts about your financial history, with little consideration of you and your family as people. When you meet with a human mortgage advisor, you’re speaking with someone who understands the challenges that regular people face. They have also worked with numerous other clients and can appreciate why certain circumstances may have come up in the past.

A Human Will Go To Bat For You If Needed

Finally, don’t forget that a human mortgage professional is invested in your success. A mobile app isn’t going to understand when it needs to go the “extra mile” to ensure that you get the financing you need. You can trust that a human will push for that extra bit of funding or those better repayment terms as they’re on your side.

The above are just a few of the many reasons that you will want to work with a human mortgage advisor rather than using a website or mobile app. Don’t believe us? Give your local professional (and human!) mortgage team a call today. 

What To Know About Your Debt-To-Income Ratio When Buying A Home

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What To Know About Your Debt-To-Income Ratio When Buying A HomeWhen you apply for a mortgage, your lender will do some quick math to figure out how much of a loan you can afford. Your lender will consider many factors, and one of the most important ones is your debt-to-income ratio. It is usually shortened to DTI, and understanding this formula can help you better understand how big of a house you can afford. 

An Overview Of A DTI

Your DTI represents the amount of money you spend compared to the amount you make. Your lender is going to have very strict DTI requirements when deciding whether you can be approved for a mortgage. The lender wants to make sure you are not taking on a loan that you cannot afford to pay. If you cannot pay back your mortgage, your lender ultimately loses that money. Generally, your lender will want to see a lower DTI as they go through your application.

Front-End DTI

Your front-end DTI includes all expenses related to housing. This includes your homeowners’ association dues, your real estate taxes, your homeowners’ insurance, and your future monthly mortgage payment. In essence, this will be your DTI after your lender gives you a potential loan. 

Back-End DTI

Then, your lender is also going to take a look at your back-end DTI. This the first two other forms of debt that could go into your DTI. A few examples include car loans, student loans, credit card debt, and personal loans. Generally, this is the most important number because it is debt that you already carry when you apply for a mortgage. Your lender can always make adjustments to your home loan to fix your front-end DTI, but your lender does not have any control over your back-end DTI. 

What Is A Strong DTI?

Every lender will take a slightly different approach, but lenders prefer to see a total DTI somewhere around 32 or 34 percent. If you already have this much debt when you apply for a mortgage, you may have a difficult time qualifying for a home loan. On the other hand, if you don’t have a lot of debt, your lender may qualify you for a larger home loan. 

 

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