Is it a Good Idea to Get a Non-QM Refi in This Market?

For most people in the industry, we knew it was just a matter of time before mortgage rates started to ease back up. While the Federal Reserve was instrumental in keeping rates low for everyone during the COVID-19 pandemic and keeping the economy viable, the industry is being primed with new talks about possible incremental rate increases in the very near future.

Consequently, for those who didn’t have an opportunity to refinance their mortgage at our current historic low rates, it may be the time to consider refinancing now while rates are still low.

But what about individuals who were temporarily laid off during the pandemic, showing gaps in employment? Or those who used this time to stick their toe into self-employment? While getting approved for a conventional mortgage is difficult enough for those with good credit scores and a stable work history, those who got hit the hardest during COVID may not have the ability to look toward conventional mortgage financing for a refinance. If you are one of these people, do you have options?

Non-qualifying Mortgages Dried Up During COVID

The mortgage industry had a banner year during COVID, with many homeowners rushing to refinance their homes with the new rates. Refinances fueled the massive boom in loan originations, and lenders struggled to keep up.

In the meantime, other lenders stopped offering non-qualifying loans due to the feelings of vulnerability in the bond market. Non-qualifying loan products are those not backed by the government. These lenders are usually private and institutional investors. With the overarching sense of vulnerability during that time, non-QM home financing dried up for a time leaving those who could not qualify for a conventional mortgage out in the cold.

New Opportunities For Non-QM Mortgages

Fortunately, non-qualifying mortgage lending has picked back up this year. This is fortunate for individuals who may have been impacted by COVID temporary layoffs or have pursued self-employment or other income that may not be shown on tax returns. While most conventional mortgages require tax return income verification, non-qualifying mortgage approval relies on different methods of income verification and often has less stringent qualifying parameters.

Mortgage Interest Rates Will Probably Never Be This Low Again

Desperate times called for desperate measures. With the highly unpredictable nature of the past two years, low interest rates helped both the economy and individuals get through tough times.

But this can’t go on forever, and the Federal Reserve has said as much. Once they allow the economy to even itself out again, rate increases will be a natural consequence.

If you have considered refinancing your current mortgage but are concerned that you can’t qualify for a conventional mortgage, you may want to consider a non-qualifying mortgage product. Rates may be a bit higher than conventional due to added risks, but they are still the lowest in history. These, like conventional mortgage rates, will not last forever.

If you have questions about refinancing with a non-qualifying mortgage, contact the professionals at NonQMHomeLoans.com. We offer a broad range of mortgage products from conventional to private investor mortgages. Contact us at (800) 413-0240 or apply for a loan easily here.