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What Are NON-QM Loans?

September 12, 2018
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You’ve always wanted to get into real estate investing, especially since you keep hearing how beneficial it can be. But as you look over your finances you begin to doubt if you can. “Why can’t banks do NON QM loans?” you think. “A loan that looks beyond my credit score and numbers to make a loan that’s perfect for me?”

If you’ve been wanting to get into real estate investing, read on to learn about our customized NON QM loans and the many advantages they can offer.

NON-QM Loans

Customized NON QM loans are called custom because they are crafted just for you.

NON-QM LoansSo, What Are NON QM loans?

QM Loans stands for Qualified Mortgage loans. These loans look into all aspects of a borrowers ability to repay a loan including income ratios, debt load, credit score and many other factors including the habitability of the house securing the mortgage.

“So what does this mean for me?”

Suppose you found the perfect fixer-upper. The house needs a lot of work but has a lot of potential. A traditional bank will only see what is: A house that needs work. A funding group offering a customized NON QM loan will see what could be: An investment opportunity. They look outside the normal credentials of credits scores and income to take a look at the opportunity as a whole.

That means that while banks and other lenders might not finance your loan, a non QM lender (Hard Money Lender) will because they know you’re more than numbers. You’re an investor with possibilities.

NON-QM Loans

NON-QM LoansWhy Borrowers Choose a NON QM Loan

There are many reasons why borrows choose a non QM loan, like:

• They require a quick closing and banks cannot meet the deadline
• They have more good opportunities than cash to purchase them
• They want to avoid spending too much time raising equity or debt from many different smaller investors but prefers to instead focus on finding new opportunities
• They prefer not to provide all the documentation to a bank including tax returns
• They have an excellent investment opportunity, but do not have sufficient financial strength to get a bank loan
• The house needs repairs to unlock the value and banks can’t see past the house in its current condition

There are several types of custom loans to suit your needs

NON-QM LoansTypes of Non QM Loans

There three different types of non QM loans a hard money lender may offer, such as:

  • Private Money Rehabilitation Loans
  • Private Money Bridge Loans
  • Direct Permanent-End Financing

What type of loan a hard money lender will customize for you depends on your investment type and goals. So be sure to have a plan  when you’re ready to invest.

NON-QM Loans

Private Money Rehab LoansNON-QM Loans

These are often called “Fix and Flip” loans because borrowers use them to fix properties to sell. Suppose you stumble upon a great apartment building or two family house in a heavily trafficked location. It just has one problem: It needs work. With a rehab loan, you could buy the property for a discount, fix it up, and then sell it for a much better price.

The bonus to this type of Non QM loan is that you’ll only make interest payments during its short-term and pay the full principal amount when the loan ends.  These loans can even be structured to finance your repairs!

Private Money Bridge LoansNON-QM Loans

Bridge loans are another type of short-term loan that can last a few months or up to a year. They are called bridge loans because the bridge the gap between loans or properties. They are perfect for investors who can’t finance their desired property with other types of loans. For instance, let’s say you found the perfect home to rent out but you want to get updated architectural plans to increase the number of units. With a bridge loan you could buy the property, get the plans approved and then refinance.

Bridge loans are also used by investors who have assets, but are low on cash. Let’s say you’ve found the best rental or flip property for you. It’s close to where you live and you consider it a nice investment. There’s just one thing: You need to sell your current investment property to afford it. A bridge loan can help you access the value in your current asset to buy the new property.NON-QM Loans

Direct Permanent Financing

The basics of a direct permanent financing loan are it helps you pay off a short-term loan with longer term mortgage. Suppose you’ve taken out a Rehab loan to renovate a property, but it a property that you want to keep as a rental instead of selling. Typically rehab loas have a 9-12 month term and you have to pay the principle back.  With a direct permanent financing loan, sometimes called a rental loan,  you can pay off your short-term loan and refinance the property with 5, 7 10 and even sometimes 30 year terms!

Invest in Your Future with Gauntlet Funding Today

Gauntlet Funding is a New York-based private funding group comprised of experienced and knowledgeable industry professionals who specialize in direct private lending and distressed asset financing. If you’re considering Non-QM loans, call Gauntlet Funding today at (631) 465-2161 to start your new financial future.

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What Are Non QM Loans?Gauntlet Funding-Melville, NY 

 

 

 


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