Mortgage News: New Mortgage Options for Outside the Box Buyers

After the housing crisis, the underwriting criteria to qualify for mortgage became much stricter as lenders looked to minimize their risk. Unfortunately, these more stringent guidelines have excluded many would-be homebuyers from securing mortgage financing even though they are creditworthy. In order to service this market, some smaller lenders are branching into offering non-conforming home financing solutions for people who have the means to make mortgage payments but do not fit neatly into today’s stringent underwriting guidelines.

What You Need to Know About Non-Qualified Mortgages

According to the Los Angeles Times, lenders who offer non-qualified mortgages use flexible underwriting standards when evaluating a borrower’s creditworthiness when compared to the requirements for a conforming mortgage. For example, a self-employed person might have variations in their monthly income, but overall they have sufficient income to make mortgage payments. Other individuals might have a debt to income ratio just outside the limits set for qualified mortgages. Since these lenders are taking a slightly greater risk by extending non-qualifying mortgages, the interest rates of these loans tend to be one to 1.5 points higher than what lender charged for traditional mortgages backed by Fannie Mae or Freddie Mac.

To learn more about your mortgage options if you have unique financial circumstances, contact a local mortgage broker today.