We often facilitate “concurrent closings” – where we fund a loan for a new home shortly after the sale of the departing residence closes.
Clients (agents and buyers) sometimes get frustrated, though, when we are not able to fund the financing for the new home on the same day that the departing residence sale closes.
That is not to say we never can (we often can), but there are many situations where we can’t.
If a buyer cannot qualify for the new home financing without selling the departing residence, we are not even allowed to sign loan documents for the new residence until the departing residence sale closes.
This is because the new home loan documents show the liabilities associated with the departing residence as “paid off.” So, a borrower cannot legally sign those documents until the liabilities are in fact paid off.
In addition, we are often delayed by just waiting for the net proceeds from the departing residence sale.
My point: buyers should not always expect concurrent closes to be exactly concurrent.
No Income Verification Loans
True “no income verification” loans have become some of our hottest products in recent months.
This is a result of our marketing (thank you, Claude), the availability of more no-income loan products, and more demand for these loans.
These loans do not require ANY type of income verification – and they should not be confused with “alternative income” loans such as DSCR, bank statement, or asset-based loans.
What makes these loans so appealing is how easy they are to qualify for.
If borrowers have credit scores above 720, they can qualify for a no-income loan with only 20% down and 9 months of “reserves” after close.
“Reserves” refer to liquid funds, and one month equals one housing payment (principal, interest, property taxes, insurance, HOA dues, if any).
Borrowers only need 6 months of reserves for most loans with down payments of 25% or more.
And again – no job and no income are required.
Borrowers with lower credit scores (all the way down to 620) can qualify with larger down payments (the lower the score, the higher the down payment).
The rates are not low, but they are much lower than hard money. In today’s market, borrowers typically get something in the high 8% range at the cost of points.
These loans are available for purchases, rate and term refinances, and cash-out refinances (equity requirements are a bit higher).
If borrowers can qualify with income, they should of course obtain a loan with income verification because the rates are much lower.
But, if they can’t – these loans are a fantastic alternative, and they are far less expensive than the hard money loans we used to pitch.
In addition, these loans make for great temporary solutions. When borrowers can show income, they can always refinance out of their no-income loans.
