Today, as long as lenders follow these strict lending guidelines, they are protected from liability. Millions of people who had home loans could not afford the payments. This willy-nilly approach was one of the reasons the recession hit with such ferocity. Unethical lenders would crowbar home buyers into mortgages that were unaffordable. Some mortgages did not verify income at all. Why do these regulations exist? In the years leading up to the Great Recession, lenders seemed willing to approve mortgages for anyone with a pulse, including those with poor credit and low down payments. These minimum standards for qualified mortgages are part of the 2010 Consumer Protection Act and Dodd-Frank Wall Street Reform Act. The above regulations also protect buyers from risky loans. If you can't tick all of the above boxes, you'll need to look into non-qualifying mortgages.Įssentially, mortgage lenders need to know you have the ability to repay your loan. Loan term: The loan term must be 30 years or less.No risky loan features: Risky features include interest-only loans (where you only pay interest without reducing the principal), negative amortization (where your principal can increase, even while you are making payments), or balloon payments (where a larger payment can be tacked on to the end of the loan).Limits on fees: Points and fees on your loan cannot exceed 3% of the loan amount.This is the amount of your monthly income that goes toward your existing debts. Debt: Your debt-to-income ratio (DTI) must be 43% or less.Income: You must have verifiable income, including pay stubs, W-2s, and tax returns.To qualify for a traditional mortgage, you must meet these requirements: The best way to understand a non-qualifying mortgage is to look at the criteria for traditional, qualifying mortgages. For example, if you are self-employed or don't have all the necessary documentation to qualify for a traditional mortgage, you might need to look at non-qualified mortgages. “I purchased and refinanced my home with this company, and they were very professional! Definitely recommend.A non-qualified mortgage (non-QM) is a home loan designed to help home buyers who can't meet the strict criteria of a qualifying mortgage. He’s helped us with two purchases and was very responsive and professional.” - Daniel Alonzo Chris is our go-to man for all mortgage needs. I highly recommend them!” - Ernsy Gauthier They took the time to answer all my questions and walk me through the process. “I had such a positive experience with E 3 Mortgage. Happy homeowners are our specialty! Here’s what people we’ve helped say about their E 3 experience: Get started today! What Homeowners Say About E 3 Mortgage When you’re ready to discuss your options with a loan specialist, the experts at E3 Mortgage are ready to help. However, if you don’t fit the mold to qualify for a QM loan for the perfect house, a non-QM loan may be a viable option. If you meet the criteria for a qualified mortgage, you will find the terms stricter but more secure than a non-qualified mortgage.
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