Is a Non-QM Loan a Bad Thing?
By now, you may have heard the term Non-QM loan. But, what exactly is it and is it something that can benefit you & your family? “QM” stands for Quality Mortgage, thus the term Non-QM means Non-Quality Mortgage. If it’s not “quality” just how BAD is it? Or, is it not really bad at all?
If it were “non-QB” for “non-Quality Beef” or “non-QH” for “non-Quality Housing”, these would all be pretty bad things and yet your lender is suggesting that you get one of these Non-QM loans?
It may help to understand what a “quality” mortgage is plus who makes that determination and why? Now, we all know that our elected officials are much smarter than the rest of us little people so they defined what “quality” is to protect us from our own ignorance.
It’s Not A Mortgage?
The other thing you should know about a Non-QM mortgage is that it’s not a mortgage at all. Rather, it’s really just a term to represent anything that doesn’t fit the term of a quality mortgage. It’s a group of different types of mortgages designed to add some flexibility to the qualification of home loans.
There is no such thing as a one-size-fits-all mortgage, and we can’t all be expected to fit into this nice little box of qualifications that the government deems as “quality” so lenders have come up with alternative ways of documenting loans to accommodate those of us that don’t fit in those little boxes.
This could be just a matter of supplying bank statements in lieu of tax returns to prove income. Or, something that allows would-be investors to buy rental properties based on the income of that property only. Or, it could be a loan that’s structured to pay off quickly based on the homebuyers’ saving habits.
In a nutshell, a Non-QM loan is designed to accommodate you instead of forcing you to accommodate the lender. If you’d like to know more about some of the different types of non-QM loans to see if one can help you achieve your personal goals of a debt-free lifestyle, click here.
