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NON-QM Loans
What rates should I expect and how long will it take to close and what do I need to show for getting approved for Non-QM loan for a house (Sale Price $680 K)
* My Mortgage Scores are 720+
* Last year gross business income $853K
* Business Checking has over $150K
* Self Employed since 2007 running the same company.
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1 Reply
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Based on what you have shared, here is a general picture of your expectations regarding rates, close timelines, and documentation required for approval when getting a non-QM (Qualified Mortgage) loan.
Non-QM Loan Rates Estimate
Interest Rates: Due to increased risk, non-QM loans have significantly higher interest rates than QM loans. However, with your decent credit score 720+, you will likely enjoy rates between 4.5% and 6.5% based on market forces and lenders’ policies.
Variable Rates: A few non-QM loans can also have variable rates, so it would be best to ask about the details beforehand.
Closing Timeline for Non-QM Loan
Typical Closing Time: Such instances occur in rare cases where Non-QM loans close sooner than the 30-60 days maximum waiting period. At the other end of the spectrum, Non-QM loans would close later as some of these loans have higher average closing times than traditional ones. Of course, this also depends on the lender and how complicated your finances are.
Preparation: The best way to streamline a purchase closing is to gather all the documents you plan to use and keep them strategically organized.
Documentation Required to Get Approved
As an independent borrower, you must submit documents allowing them to assess your income. The following list outlines the most common documentation you will expect.
Tax Returns: Submit personal and business income tax returns for the previous two years. Some lenders may want to see the past three years for the self-employed.
Profit and Loss Statements: Additional P & L statements for preceding business periods, specifically the current year, may be required by your lender. Others may ask you to produce them through CPA assistance.
Bank Statements: The last 2-3 months of business statements must display reserves and cash flow. Low business checking over $150K shall be considered strong leverage.
Credit Report: Your mortgage scores of more than 720 are excellent, so lenders will check your credit report to learn about you.
Business License: Any business license you have or registration documents detailing your self-employment will help prove that your business is real.
Debt Obligations: Documents regarding current debts, including mortgage loans, personal loans, or credit cards.
Things to Look for
Lender Selection: Since not all lenders grant non-QM loans, preparing to look for one is best. Specifically, self-employed borrowers are advised to approach lenders with such experience.
Loan Terms: Study the loan terms and conditions, such as prepayment penalties.
Consult a Mortgage Broker: A broker experienced in non-QM products can assist you with finding the right fit for your needs.
You are ready for a Non-Qm loan, given your target home sale price of 680K, a decent credit score, business income, and considerable business reserves. Prepare yourself for a moving range between 4.5 to 6.5, alongside closing conditions that will fall for a month to two months. Ensure you have all your paperwork done for everything to proceed smoothly. Should you have any additional questions or require assistance, do not hesitate to ask.