Non-QM Loan in Yuma County, Arizona: What You Need to Know
If you're looking for a mortgage loan in Yuma County, Arizona but don't meet the strict requirements of traditional lenders, a non-qualified mortgage (non-QM) loan may be your best option. Non-QM loans are designed for borrowers who have unique financial situations that make it difficult to qualify for conventional mortgages.
What is a Non-QM Loan?
A non-qualified mortgage loan is any type of home financing that doesn't conform to the standards set by Fannie Mae and Freddie Mac. These government-sponsored entities buy most conventional mortgages from lenders, which means they set the guidelines for credit scores, debt-to-income ratios, and other factors.
In contrast, non-QM loans are underwritten by private investors or lenders who can create their own rules based on risk tolerance and market demand. This flexibility allows them to offer financing options that cater to borrowers with less-than-perfect credit histories or complex income sources.
Types of Non-QM Loans
There are several types of non-qualified mortgage loans available in Yuma County:
1. Bank Statement Loans These loans allow self-employed individuals or business owners to use their bank statements as proof of income instead of tax returns. Lenders will look at deposits over the past 12 months and average them out to determine eligibility.
2. Asset-Based Loans With this type of loan, borrowers can use assets such as stocks, bonds, or real estate holdings as collateral instead of relying solely on their credit score or income history.
3. Jumbo Loans A jumbo loan is any mortgage that exceeds the maximum amount allowed by Fannie Mae and Freddie Mac ($548,250 in 2021). Since these loans carry more risk due to their size and complexity, they often require higher down payments and stricter underwriting standards than conventional mortgages.
4. Interest-only Loans An interest-only loan allows borrowers to pay only the interest on their mortgage for a set period of time (usually 5-10 years) before beginning to pay down the principal. This can be an attractive option for those who expect their income to increase in the future or plan to sell their home before the end of the interest-only period.
Benefits of Non-QM Loans
The main advantage of non-qualified mortgage loans is that they offer more flexibility than traditional mortgages. Borrowers who don't meet strict credit score or income requirements may still be able to qualify based on other factors such as assets, bank statements, or employment history.
Additionally, non-QM loans often have faster approval times and fewer documentation requirements than conventional mortgages. This can make them a good choice for self-employed individuals or those with irregular income streams who may struggle to provide W2s and tax returns.
Finally, non-qualified mortgage loans are available for a wide range of property types including investment properties, vacation homes, and multi-unit buildings. Conventional lenders often have restrictions on these types of properties which can limit financing options.
Conclusion
If you're looking for a mortgage loan in Yuma County but don't fit into the mold of a traditional borrower, consider exploring your options with non-qualified mortgage loans. With flexible underwriting standards and unique financing structures, these loans could help you achieve your homeownership goals even if you don't meet all the standard criteria.
