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This year, non-qualified mortgages could be the game-changing lending solution for homebuyers – and homeowners – who have yet been given an opportunity to achieve their homeownership dreams through traditional home loans.
Non-qualified mortgages (“Non-QMs”) are ideal financing solutions for borrowers who may not meet the qualifying criteria for traditional mortgages (or qualified mortgages). A qualified mortgage is a category of loans that have certain, more stable features that help make it more likely that a borrower will be able to afford their loan. In comparison, non-QMs offer homebuyers (as well as homeowners looking to refinance, investors, or individuals with complex finances) access to financing solutions with less strict qualifying criteria.
But why non-QMs now? Non-QMs are becoming an attractive mortgage choice for more borrowers because more homebuyers are in need of alternative lending solutions to qualify for home financing and buy their home. What could be causing a shift in borrower needs and demand? A few things:
- Rising interest rates.
- A competitive housing market with low inventory.
- A decline in refinance business and large uptick in the purchase market.
- Borrowers who don’t fall within traditional qualifying guidelines are turning toward alternative lending solutions.
A Variety of Homebuyers Can Benefit From Non-QMs, Including:
- Self-employed borrowers
- Freelancers, gig economy workers
- Real estate investors
- Borrowers with high net-worth
- Commission-based homebuyers
- Business owners
- Homebuyers with investments, trust funds, large assets, or low reportable income
- Borrowers with high debt-to-income ratios
- Homebuyers with less-than-perfect credit
Newrez’s Smart Series
Non-QMs are breaking traditional jumbo loan barriers and creating opportunity for homebuyers to make qualifying easier. Amid shifting borrower trends, Newrez’s Smart Series product suite continues to gain traction and market share. Additionally, Newrez is prepared to help you maximize the opportunity to serve an underserved group of borrowers. Our Smart Series is comprised of three products, SmartSelf, SmartVest, and SmartEdge. These programs are built with features that allow:
- Alternative income documentation
- Less strict credit requirements
- Flexible terms like interest-only payments
- Higher debt-to-income ratios
- Purchase, refinance, and cash-out options
- And more!
Newrez’s SmartSelf: A Self-Employed Borrower’s Dream Home Loan
SmartSelf is an ideal loan option for a self-employed borrower, or other business owners, who may not qualify for a mortgage using tax returns for income verification.
Did you know? Self-employment has been on the rise for decades, now making up nearly 30 percent of Americans’ incomes; more than 44 million Americans are self-employed. From business owners and contractors to a growing gig economy, there’s a sizeable group of borrowers in need of mortgages that work with their lifestyles, careers, and financing needs – and that’s where SmartSelf can help.
With SmartSelf, borrowers may qualify using bank statements, 1099s, or assets! It’s designed to make qualifying less restrictive and homeownership dreams achievable.
Newrez’s SmartVest: An Investor Loan Designed With Complex Finances in Mind
SmartVest is a non-qualified mortgage option that’s ideal for experienced real estate investors who have complex finances, are growing large portfolios, or want to grow their income with investment (rental) properties. Have any clients looking to grow their current portfolio, finance multiple properties at once, or explore an Airbnb possibility? SmartVest is a flexible investor loan that gives borrowers options:
- Purchase additional investment portfolio inventory.
- Access equity in a current portfolio of homes to buy more investment properties.
- Use equity in current portfolio to upgrade or remodel existing portfolio properties.
- Use the market rent (cash flow) from the subject property to qualify.
With less documentation required compared to a conventional loan, qualifying for investor financing is easier!
Newrez’s SmartEdge: A Jumbo-Sized Loan With Relaxed Qualifying Guidelines
For borrowers who fall just outside of strict jumbo loan guidelines, SmartEdge may be a perfect financing solution. What’s different? Non-traditional features, flexible guidelines, and interest-only payments.
One of the most notable highlights about SmartEdge is that it’s a great solution for borrowers who have had a recent derogatory credit event (like a bankruptcy, short sale, or foreclosure) in the past that prevents them from qualifying for conforming loans.
With only a 2-4 year wait time to apply after a damaging credit mishap, loan amounts up to $3 million, and alternative income qualifications (including assets), jumbo-sized loans are no longer out of reach for many borrowers. Trust fund inheritors, former athletes, someone who sold a business for a large profit, restricted stock owners, and borrowers with credit mishaps could qualify for a jumbo-sized mortgage – and no longer be limited by traditional financing guidelines.
The Newrez Difference:
Not only does Newrez have a division dedicated to non-qualified mortgages, but the company has seasoned non-QM underwriters who are trained specifically to review and approve Smart Series loans, experienced operations teams working behind the scenes to keep borrowers’ loans on the fast track to the closing table, and non-QM certified loan officers. Newrez also provides user-friendly systems and technology to support documentation uploads as needed every step of the way to closing.
One of Newrez’s highest missions has always been to expand borrower options by offering mortgages that work for – and not against – homebuyers and homeowners.
Ready to conquer 2022? Head to the Newrez blogs to learn more about how Smart Series could transform the homebuying experience for countless borrowers.
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