Loans for Asset-Rich or Self-Employed Borrowers
I was chatting with our account exec for one of our Non-QM investors, and she told me she’s putting in 12-hour days because she is so busy.
She said there is a massive niche for self-employed and asset-rich borrowers that most agents and loan officers are clearly missing, but fortunately her clients are not.
In any case, it prompted me to blog about it again.
NOTE: ALL OF THESE LOANS ARE FOR INDIVIDUALS WHO CAN’T QUALIFY WITH TRADITIONAL INCOME SOURCES SUCH AS W2s AND/OR TAX RETURNS
THESE LOANS SHOULD NOT BE CONSIDERED “SUB-PRIME” TOO, AS MOST OF THESE BORROWERS HAVE EXCELLENT CREDIT AND ARE QUITE WELL OFF.
Asset Utilization Loans
These loans only require asset verifications to qualify.
Assets include checking, savings, and money market accounts; 80% of stock accounts; and 70% of retirement accounts.
For one of our better loan options, borrowers need enough assets to purchase the house in full – plus enough extra to cover closing costs, 6 months of house payments, and 60 months of total other debt payments.
For example, if someone wants to purchase a $600,000 home, and she has car and credit card payments equal to $1,000 per month – she would only need to verify about $700,000 of assets to qualify. And only 20% of those assets, plus closing costs, would need to be used towards the purchase.
The rates are about 1% to 2% higher than typical Fannie Mae rates.
These loans are excellent for anyone who does NOT want to liquidate assets to purchase a property.
DSCR Loans/LLC Loans
DSCR stands for Debt Service Coverage Ratio. These loans are for investors only and they use nothing but the future rent for the property to qualify.
Minimum down payment is 20%, and the rates are 2% to 3% higher than typical Fannie Mae rates, depending on credit scores.
These loans are much better alternatives to the hard money loans that many investors rely on because the rates, fees, and down payment requirements are so much lower.
In addition, these loans can close in the name of an LLC (a request we get all the time).
Interestingly, it is these loans that are keeping our Non-QM investor so busy right now, as she is inundated with them.
Bank Statement Loans
These loans simply use bank deposits to qualify for mortgages.
We can use the last 12 months of bank statements and average all of the deposits.
OR – we can use ONLY the most recent two months of bank statements along with an officially prepared (by CPA or Tax Preparer) Profit and Loss Statement (a great option for many real estate agents).
Minimum down is 20%, and the rates are 1% to 2% higher than typical Fannie Mae rates, depending on credit scores.