1.
Non-Qualified
Mortgage
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2.
There are two types of mortgages:
Qualified
Non- Qualified
The difference is whether or not the government agencies
protect the lender against any type of lawsuit against them
should a borrower become unable to afford their mortgage
payments and want to sue.
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3.
What is a Non-Qualified Loan?
A “non-qualified” loan (non-QM), means that
the borrower does not meet the “qualified
mortgage” guidelines and poses a higher
risk in terms of default.
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4.
What is a Qualified Mortgage?
A “qualified” mortgage (QM) means that the borrower meets
certain requirements pertaining to his ability to afford the
loan at the time of application. In this case, the lender would
be protected against any penalties regarding this loan
should the borrower default.
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5.
Qualified Mortgage Rules
Debt ratio cannot exceed 43% no matter the type of
loan (FHA, VA, conventional)
Points and/or fees should not exceed 3% of the
loan amount
The loan cannot be interest only, have negative
amortization, or any other risky features
Verification of income is required (no stated income
or asset verification only)
Loan term must not exceed 30 years
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6.
Non-Qualified Does not Mean Not Able to Pay
The Ability to Repay Rule, put into place by the Dodd-
Frank Act, requires lenders to ensure that borrowers can
afford the loan. This means:
Verifying income and/or assets
Verifying employment
Accurately calculating the debt to
income ratio
Evaluating credit history
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7.
The non-qualified loan is a great option for
borrowers in unique circumstances including:
Self-employed for less than 2 years
Self-employed and not showing a great
amount of income on tax returns
High debt ratio yet plenty of reserves to
make up for the debt ratio
Blemished credit due to unforeseen
circumstances during the downfall of the
economy
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8.
T O L E A R N M O R E
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LENDER HOTLINE: 888-581-5008
C L IC K HE R E
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9.
Justin McHood is Americas Mortgage
Commentator and has been providing
Mortgage commentary for over 10 years.
INFORMATION PROVIDED BY:
Justin McHood
Mortgage Commentator
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10.
LEARN MORE ABOUT MORTGAGE COMMENTATOR:
MORTGAGECOMMENTATOR.COM
@MORTGAGECOM_
FACEBOOK.COM/MORTGAGECOMMENTATOR
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