Economic times have become very uncertain. Our historically-low interest rates have begun to rise, and many who were in the market for a mortgage are having a very difficult time. Whether employment complications related to COVID are still an issue or the hike in interest rates has put you in a difficult position, there are other options outside of traditional QM loans. Non-QM loans might provide a different way for you to become a homeowner – but what are they, and how do they differ from other mortgage loans in South Carolina?
What is a QM Loan?
A QM loan is a qualified mortgage loan. It is lower risk and tends to be more affordable than non-QM loans. So what’s the catch? A QM loan is approved according to a standard of “ability to repay” rules that not every borrower will meet. A qualified mortgage indicates a loan where the lender has ascertained specific guidelines necessary to verify that a borrower can repay a loan.
What is a Non-QM Loan?
A non-qualified loan differs from traditional loans and lending practices because it is guided by other parameters than the standard qualifying criteria. Because it doesn’t use the standard of “ability to repay” in the traditional sense, it opens up lending options for many who can repay loans and should be given the chance. Often, reputable borrowers can’t get a loan due to things that are outside of their control.
What are the Types of Non-QM Loans?
Non-QM loans are structured differently and are based on criteria that reduce the risk of loss by the lender, but also extend various packages and options for borrowers who don’t fit within the traditional parameters. Types of non-QM loans include:
- Bank-Statement Loans
- Asset-Based Loans
- Foreign National Loans
- Interest-Only Loans
- Jumbo Loans With 5% Down
- Recent Credit Event Loans
Who are Non-QM Loans Appropriate For?
Non-QM loans come with options that traditional ones do not, but they also typically have higher interest rates due to an increased risk of non-repayment. They are an excellent mortgage option for people who have a complicated credit history, but also have the means to repay a loan according to verification of assets and collateral. The best way to know if a non-QM loan is right for you is to weigh the positives versus the negatives of the specific loan terms.
Are Non-QM Loans in South Carolina Right for You?
If you are having a difficult time securing a mortgage loan, now is the time to act. With interest rates on the rise, time is running out. Non-QM loans provide alternatives to traditional loan offerings for people who don’t fit the criteria to secure a QM loan in Charleston. At Home Spring Mortgage, we find solutions where others see roadblocks and can find the right non-QM loan package for even the most complex lending scenarios. Contact us today to find mortgage loans in South Carolina that make sense for your situation!