What Are Non QM Loans And How Are They Different From Qualified Mortgages

November 9, 2018

A number of people will specifically try to get non-qualified mortgage loans today. The differences between qualified loans and non-qualified loans are actually more complicated and extensive than they seem, at least in practice. Still, non QM loans are unmistakable.

Qualified loans come with a lot of their own complicated rules. The non-qualified mortgage loans won’t comply with these rules, which will make them inherently different from qualified mortgage loans in an overarching sense. However, it’s just as important for people to understand the more specific differences between these two loan categories.


Non-qualified mortgages versus qualified mortgages


Understanding Non-Qualified Mortgage Loans and Qualified Mortgages

1. People who have a difficult time completely documenting their income levels might have to get non-qualified mortgage loans.

The people who heavily participate in the modern gig economy might struggle when it comes to fully documenting the amount of money that they earn. This might also be the case for some of the people who earn a living online.

Different organizations will have different standards when it comes to the level of documentation that they expect. People who are in this situation might struggle to get loans in general, but getting a non-qualified mortgage loan should be possible for them.


2. Qualified mortgages can’t have terms and conditions that extend for more than three decades into the future.

Some people will want very small mortgage payments that they can make every month, and they’ll be willing to make those payments over the course of more than three decades. These are the people who should get non-qualified mortgages instead of qualified mortgages.

Other people will want clearer limits associated with these mortgages, since they won’t want to be paying off their mortgages for the majority of their lives. It’s possible to get mortgages that last for forty years, and this will be the case with some of the people who are interested in non-qualified mortgage loans.


3. People who want interest-only loans will be able to get them if they apply for non-qualified mortgage loans, and they won’t be able to get qualified mortgages that have that feature.

There are some benefits associated with interest-only loans, and some risks. With interest-only loans, there will be a period of time where the borrower won’t be paying any additional interest on the loan.

This is a time period that can last between five and ten years, so it is significant. People who want this option may have to get non-qualified loans instead of qualified ones.