As a loan officer, you’re constantly on the lookout for new opportunities to grow your business and help more clients achieve their financial goals. One area that’s been gaining traction in recent years is non-QM loans. However, despite their growing popularity, there are still many misconceptions about these loans that can hold loan officers back from exploring this new opportunity.
In this blog post, we’ll take a closer look at some of the most common misconceptions about non-QM loans and why they’re not accurate. By gaining a better understanding of these loans, you’ll be better equipped to help your clients find the right mortgage product that fits their needs.
Before we dive into the misconceptions, let’s start with the basics. Non-QM loans, or Non-Qualified Mortgage loans, are mortgage products that don’t fit into the traditional “qualified mortgage” (QM) category. QM loans are subject to strict rules and regulations set forth by the Consumer Financial Protection Bureau (CFPB), including requirements for loan features, pricing, and underwriting.
On the other hand, non-QM loans are not subject to these strict regulations, allowing for more flexible underwriting guidelines and loan features. This can make them a great option for borrowers who don’t meet the traditional criteria for a QM loan, such as those with a higher debt-to-income ratio or a recent credit event.
One of the biggest misconceptions about non-QM loans is that they’re high-risk. This simply isn’t true. In fact, many non-QM loans are just as safe, if not safer, than traditional QM loans.
The reason for this is that non-QM lenders are required to follow strict guidelines set forth by the investors who purchase the loans. These guidelines ensure that the loans are underwritten to the highest standards, and that the borrowers have the ability to repay the loan.
Additionally, non-QM loans are often backed by private mortgage insurance (PMI), which helps protect the lender and investor in the event of a default.
Another common misconception is that non-QM loans are hard to get approved for. This is simply not the case. In fact, many non-QM loans have more flexible underwriting guidelines than traditional QM loans, making them a great option for borrowers who don’t meet the traditional criteria.
For example, some non-QM loans may allow for a higher debt-to-income ratio or a recent credit event, such as a bankruptcy or short sale. This can make them a great option for borrowers who have been turned down for a traditional QM loan in the past.
Finally, some people believe that non-QM loans are more expensive than traditional QM loans. This is not necessarily true. While it’s true that some non-QM loans may have higher interest rates than QM loans, this is often due to the more flexible underwriting guidelines and the higher risk associated with these loans.
However, this higher interest rate can also mean that loan officers have the opportunity to earn higher fees on non-QM loans. Additionally, many non-QM loans offer more flexible loan features, such as interest-only options or longer loan terms, which can make them a more affordable option for borrowers.
In conclusion, non-QM loans are an excellent opportunity for loan officers looking to expand their business and increase their earning potential. These loans offer more flexibility and opportunities for borrowers who don’t meet the traditional underwriting criteria, allowing loan officers to serve a wider range of clients. By staying up-to-date on the latest regulations and guidelines, loan officers can ensure they are providing their clients with the best possible service and support.
At AHL Funding, we are committed to helping loan officers succeed in the non-QM market. Our team of experts provides comprehensive training and support to help loan officers navigate the world of non-QM loans and grow their business. If you are interested in exploring the opportunities available with non-QM loans, we encourage you to fill out our employment application and become a part of the AHL Funding team.
In today’s competitive lending landscape, non-QM loans provide loan officers with a new and exciting opportunity to increase their earning potential and grow their business. By understanding the benefits and overcoming the misconceptions, loan officers can confidently provide their clients with the loans they need to achieve their financial goals.