Switching from an Adjustable-Rate Mortgage (ARM) to a Fixed Rate – If your ARM is about to adjust to a significantly higher rate, locking in a fixed rate can provide stability and predictability in payments.

Eliminating Private Mortgage Insurance (PMI) – If your home value has increased enough to reach at least 20% equity, refinancing—even at a higher rate—could remove PMI and lower your overall monthly costs.

Accessing Home Equity Through a Cash-Out Refinance – If you need funds for home improvements, debt consolidation, or other financial goals, a cash-out refinance might be a better option than higher-interest alternatives like credit cards or personal loans. I recently helped a Veteran save over $1,000 per month by paying off his debt and even getting cash to update his home. Since he is saving so much on a monthly basis, he will apply the savings to the principal every month and will more than likely payoff his mortgage at a much faster pace.

Reducing Loan Term for Faster Payoff – Refinancing from a 30-year to a 15-year loan can result in higher monthly payments but significantly less interest paid overtime, helping you build equity faster.

Divorce or Removing a Co-Borrower – If you need to remove a co-borrower from the mortgage due to divorce or other reasons, refinancing is often necessary, even if it means a higher rate.

Improving Loan Type or Terms – If you originally took out a loan with unfavorable terms, refinancing into a more stable or beneficial program (such as moving from an FHA loan to a conventional loan) can make sense despite a rate increase.

It’s all about overall savings and making the correct financial moves to eventually become financially free. Every scenario is very different, if you would like to go over your scenario call me for a free no obligation consultation. Your future self and pocketbook will thank you 619-208-6499.

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Non QM loans

(Non-Qualified Mortgage loans) are designed for borrowers who don’t meet the strict criteria of a Qualified Mortgage (QM), typically because they have unconventional income sources or unique financial situations. These loans offer more flexibility compared to traditional loans, making them attractive to certain borrowers.

Key Benefits of Non QM Loans:

1. Flexible Income Verification

• Alternative Documentation: Non-QM lenders allow alternative forms of income verification such as bank statements, profit and loss statements, or assets, rather than traditional pay stubs or W-2s.
• Ideal for Self-Employed or Gig Workers: Many non-QM loans cater to self-employed individuals, freelancers, or business owners who might not have consistent or easily documented income.

2. Higher Debt-to-Income (DTI) Ratios

• Higher Tolerance for Debt: Traditional QM loans generally cap DTI ratios at 43%, but non-QM loans may allow for higher DTIs. This can be especially beneficial for borrowers with high monthly debt obligations but strong cash flow or assets.

3. Credit Score Flexibility

• For Borrowers with Imperfect Credit: Non-QM loans offer more leniency for borrowers with lower credit scores, recent credit issues (like bankruptcies or foreclosures), or limited credit history, making homeownership more accessible to those who may not qualify for conventional loans.

4. No Strict Loan Limits

• Higher Loan Amounts: Non-QM loans don’t adhere to the loan limits set by agencies like Fannie Mae and Freddie Mac, allowing for larger loan amounts (often referred to as jumbo loans), which is ideal for buyers of luxury or high-priced properties.

5. Customizable Loan Terms

• Interest-Only Payment Options: Many non-QM loans offer interest-only periods, where borrowers only pay the interest for a set time, making monthly payments lower in the initial years.
• Longer or Adjustable Terms: Borrowers can access a variety of loan structures, including adjustable-rate mortgages (ARMs), and terms that can be tailored to their financial situation.

6. Fast Approval Process

• Expedited Underwriting: Since non-QM loans don’t have to follow the same stringent regulations as QM loans, the underwriting process can be faster and more flexible, often allowing borrowers to close on loans more quickly.

7. Diverse Borrower Profiles

• Foreign Nationals: Non-QM loans can cater to foreign nationals and others without a U.S. credit history.
• Investors: Real estate investors looking to expand their portfolio without traditional income verification can benefit from the flexibility of non-QM loans.

Who Benefits from Non-QM Loans?

• Self-employed individuals with fluctuating income or complex tax returns.
• Real estate investors who prefer using rental income or assets to qualify.
• Borrowers with credit challenges, like low FICO scores, bankruptcies, or foreclosures.
• High-net-worth individuals who want to leverage their assets instead of traditional income streams.
• Foreign nationals without U.S. credit history.

Non-QM loans provide an excellent alternative for borrowers who don’t fit the conventional mold, offering greater flexibility in income documentation, loan terms, and credit requirements.

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The conforming loan limit is adjusted annually based on the Federal Housing Finance Agency’s (FHFA) assessment of changes in home prices. The new conforming loan limits for a given year are typically announced in November or December of the preceding year but was announced early this year and is now $750K. For example, the FHFA usually announces the conforming loan limits for the next year in late November or early December of the current year.

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Buy units with only 5 percent down payment

Yes, you heard right! You can now purchase 2-4 unit properties with only 5% down payment Conventional financing. In the past to purchase a 2-4 unit property with Fannie Mae conventional financing, you would’ve needed a minimum of 15% down. You of course would need to live in one of the units to meet the owner occupancy requirements but overall, this is great news. Previously to purchase a 2-4 unit property with less than 15% down, buyers would seek an FHA loan which carries a higher mortgage insurance premium and would require a self-sufficiency test on 3-4 units meaning (one must be occupied by borrower), the rents would need to at a minimum cover the mortgage payment, taxes, PMI, and insurance to qualify. The self-sufficiency test as you can only imagine posed a problem when it came to qualifications especially in southern California due to the increasing home values.

This is welcome news in today’s real estate and loan market because this will help open doors to many more borrowers looking to purchase 2-4 unit properties. This is also great news especially in Southern California where we are currently experiencing a housing shortage, not only for buyers but also for tenants. My goal is to provide you with all the necessary tools to make an informed decision while providing you great rates and no junk fees. If you should have any questions about this loan product or any other for that matter, feel free to reach out. My team and I are ready to help with your mortgage needs.

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