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So You Can't Get a QM Mortgage, What's Next?

Written by Posted On Friday, 12 June 2015 13:01
Qualified Mortgage Qualified Mortgage

Mortgage options after a QM denial

The qualified mortgage program that was enacted in 2014 is commonly referred simply as the QM. Born out of the ashes created by the last financial collapse which was a direct result of predatory lending practices. It was carefully designed to safeguard both lenders and borrowers from potentially risky mortgage agreements. Lenders closely inspect the realistic ability for borrowers to, not just successfully make initial payments, but their likelihood of satisfying the duration of the loan. Although the application process may seem similar, after examining individual and household earnings some groups may find themselves unable to be certified because they lack the physical proof of income that is required. This is typical of small business owners and other self-employed parties that rely on estimates. If you’ve been denied a QM there are still many other ways to receive quality financing for your home.

  • Flexible lenders- Self-employed individuals often run into two problems that create challenges for lenders. First of which is the lack of physical proof of earnings followed by the fact that they usually write off more deductions on their taxes which on paper lowers their gross earnings decreasing their attractiveness for a loan. Some lenders will not budge on such risks where as others are more understanding of your situation. It can be beneficial to find lenders who will allow you to add back-in items of depreciated assets ultimately raising your federal figures back above board. This can often require a fair amount of research and shared knowledgeability to reach acceptable terms of agreement.
  • Stated income- Stated income loans might not be as easy to land as they used to be, they are still an available option to consider. Verification of resources as well as contact information will need to be provided along with a formal IRS form 4506 or 8821 releasing your prior tax returns for inspection.
  • Unconventional outlets- Yet another option for the self-employed and small business owners to consider is the alternative income verification loan. This can be similar to what is called a no-doc loan with the exception that it requires more proof of income making it a safer agreement for the borrower. Qualification is based off of a 12 month period of business and personal bank statements rather than the usual two year tax returns. Also included in the determination process is a borrower submitted profit and loss statement. Finding lenders offering this option may take a little researching and usually have an interest rate that sits at an average one percent higher than market normal. This is the price for a solution to your QM denial. A relatively small amount to still have your dream home realized. For more information and assistance contact your local mortgage broker.   

 

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Brett Mosello

Luxury Mortgage Corp® is a private mortgage firm that has been providing homeowners a range of residential mortgage products since 1996. Our success is a result of providing one of the widest range of programs, some of the most competitive pricing and an experienced staff to deliver a new standard of luxury service in mortgage lending. With our corporate office located in Stamford, Connecticut, and branch locations throughout the country, our goal is to be accessible, attentive and prepared with a great team that actually likes this stuff (so you don't have to).

https://www.luxurymortgage.com/index.php

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