Although budgeting and saving come naturally to some, they don’t for everyone. It only takes a few knocks on your credit to drop your credit score, and once it goes to the dark side, recovering can be difficult. If you have a client who is applying for a mortgage and things are looking bleak, these are the best ways to help them secure bad credit mortgage loans in South Carolina!
What is Considered Bad Credit?
For lenders, a credit score tells them how much risk they are likely to assume by lending to an individual. This is a comprehensive score that ranges anywhere from 250 to 900. According to many cutoffs, a score that is less than 580 is considered poor, and it can leave some individuals out of luck on borrowing from traditional lenders. Higher scores, because they present less risk, typically also get lower interest rates, while lower scores have higher ones.
What are Non-QM Loans?
There are other ways to obtain a mortgage loan than to go through a traditional lender. A non-QM loan is also known as a “non-qualified loan.” Unlike traditional mortgage loans, a non-QM loan does not have the same stringent cut-offs, and they are a great resource for people who fall inside of the parameters of “risky” borrowers. A non-QM loan can be taken out by an individual or a business. It uses alternative measures to qualify and usually does not involve jumping through so many hoops to get approved.
What are the Advantages of a Non-QM Loan?
One of the biggest advantages of taking out a non-QM loan is that you can borrow money even if your credit score is considered poor or you have no credit history at all. Although these loans usually come with higher interest rates, once your client can build their credit score, they can take out a lower interest rate and pay off the balance of their non-QM loan – and in the interim, they can become homeowners.
What are the Disadvantages of Non-QM Loans?
The biggest disadvantage of a non-QM loan is that they typically come with a higher interest rate than traditional loans. But if you pay them off on time or ahead of time, they can provide an excellent alternative for those who would otherwise not be able to borrow money. Types of non-QM loans are:
- Bank Statement Loans
- Asset-Based Loans
- Foreign National Loans
- Interest-Only Loans
- Recent Credit Events Loans
We’re Here to Find Solutions
For some, obtaining a mortgage can be difficult – or in some instances, it can feel impossible. If you are having a hard time getting your client approved for a mortgage loan due to their credit history or lack thereof, we are here to help. Where other lenders see problems, we find solutions. Contact us today and let’s discuss how we can make your client’s dream of being a homeowner a reality!