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  • Tel: (651) 552-3681
    Email: joe@joemetzler.com

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  • Alternative loans, Bank Statement Loans, and No Doc loans in MN WI IA SD ND

    December, 1, 2020

    Traditional mortgage rules require all lenders to prove, document, and verify sufficient income to safely afford a mortgage payment.

    But face it, not everyone fits the cookie cutter mode of traditional home loans, especially the self employed. The ability to write off items on your taxes can made it look on paper like you are starving, yet you really do just fine.

    Therefore you need a non-traditional loan product, and that is exactly where our line of Non-QM loans helps the self employed borrower. Review this page for more information on the popular bank statement for income loan, the asset based programs, and even the true no documentation loans for investment properties.

    COVID-19 UPDATE: Due to an extremely volatile market, lender capacity, margin calls, and secondary market concerns caused by the virus, the ENTIRE MARKET across the country for the loan types listed on this page has constricted, with many lenders no longer offer them, or severely tightening guidelines. For example, increasing down payment requirements, or needing higher credit scores.

    These loans are slowly starting to come back, but all options may not yet be available

    Here we will review many of the current alternative loan option including bank statements loans, non-prime loans, asset based qualifying, and even no doc investor cash flow options.

    Bank statement loans

  • WHAT IS YOUR QUALIFYING INCOME?

    Current traditional loan lending rules REQUIRE ALL LENDERS to document sufficient monthly income to safely afford the house payments. Traditional loans like Fannie Mae, Freddie Mac, FHA loans, and VA loans, all deem this proof as regular documented income, like pay stubs, tax returns, social security, child support, etc.

    For self employed borrowers, lenders will look at your last two-years Federal Tax Returns, both business and personal. If you get 1099's, you are considered self-employed. We look at your return, and essentially, whatever you report to the IRS as taxable income is what we use for mortgage qualifying. If you write your income down, that is great for not paying taxes, but a gigantic problem for home loan qualifying. Learn more about self-employed mortgage loans.

    For those who received tipped income, commission, or others who income varies, your income will be averaged over two-years based on W2's and tax returns.

  • NON-TRADITIONAL INCOME LOANS IN 2020 and beyond

    Non-Traditional mortgage loans, now called Non-QM loans have made a comeback, but they are very limited compared to the early 2000's, but at least they are available again to some people in need of this type of mortgage loan option.

    Expect:

    1. Bigger down payment requirements (no less than 10%)
    2. Higher interest rates (starting about 1% higher than regular loans, and go up from there)
    3. Higher Closing Costs

    Basically you have four current alternative loan options:

  • BANK STATEMENT Loan Programs

    This is our most popular alternative documentation loan product. With bank statement programs, generally lenders will use either 100% of personal bank statement deposits, or 50% of business bank statements as your qualifying income. If you are a joint owner, business accounts are 50% of deposits, then divide by the number of owners.

    The terms are generally available as both fixed and adjustable rate mortgages, with significantly higher interest rates than traditional loans. Down payment requirements typically tend to be at least 20% down or more, but as little as 10% is possible with good credit.

    • 12 Months personal statements - 100% of deposits
    • 12 or 24 month Bank Statements - 50% of deposits divided by number of owners in company
    • Must be self employed at least two-years (and be able to prove it)
    • Rates Starting about 1% higher than standard loans (call 651-552-3681 for quote, or complete our Quick Quote Form)
    • 90% LTV with Only 24 months seasoning from:
      • Foreclosure
      • Short Sale
      • Bankruptcy
      • No 4506-T’s needed
    • Interest Only also available for Self Employed Borrowers
  • Investor No Doc Loans

    Are you an investor?  Buying a rental property?

    We have loans for investors ONLY that all you to qualify based on the simple concept that the property cash flows. No income documents, like W2's or tax returns required. 

    As an investor, buying homes under traditional conventional programs can many times be a major hassle with submitting complicated tax returns, income statements, how many homes do you already own, cash reserve requirements, and more make it difficult for many investors.

    We make it easy to qualify to buy more homes with our Cash Flow loan, which allows you to qualify simply based on a rental analysis of the property to determine cash flow. If it cash flows, you are good!  This saves you all the hassle of the complicated income statements and tax returns of conventional loans

    • No personal income used to qualify
    • Qualification based on property cash flow
    • 2 years seasoning for foreclosure, short sale, bankruptcy or deed-in-lieu
    • Credit scores down to 680
    • Rates starting in the 6’s with excellent credit.
    • Up to 80% Loan-to-value - Buy may be lower depending on situation
    • No Debt-to-Income restrictions
    • MUST have a current primary home mortgage
    • Property can NOT be rural
    • 1-4 units and condos
    • No limit on number of properties financed (but just 5 with us)
    • Loans up to $1.5 million
    • Seller paid closing costs up to 2% of the purchase price.
    • 7/1 ARM and 30-yr fixed Available

    Learn more about our no doc rental property loans.

     

  • STATED INCOME Loan Programs

    Old fashioned stated income loans are also becoming available again. These loans are known as "Outside of Dodd Frank" loans that don't meet the strict "Qualified Mortgage" rules that dictate traditional mortgage loans.

    • No proof of income needed (stated income)
    • Investment properties only
    • W2 job OK. (don't need to be self employed)
    • Must prove down payment and closing costs money
    • No Reserves required
    • Up To 75% LTV (25% down)
    • Interest Only payment available
    • No Pre Payment Penalties
    • Rates start about 2% higher than standard loans
    • 1 – 4 unit properties:
    • Business purpose O/O
    • Foreign Nationals OK
    • Fix and Flip
    • Property can NOT be rural in nature.

    ASSET BASED / ASSET DEPLETION Loan Programs

    In lieu of normal income documentation, borrowers with significant net worth may qualify for a mortgage loan by documenting sufficient assets to cover the following:

    • Loan amount, and
    • down payment, and
    • closing costs and pre-paids (escrows), and
    • 5-years of current monthly other debt (car loans, credit cards, student loans, etc), and
    • have no less than 6 months of the new house payment still left over.
    Minimum assets required is $500,000 in post closing assets
     
    1) 720 credit score or higher
    2) Maximum loan is 75% of purchase price or appraised value in a refinance
    3) All assets used to qualify must be in the account for at least 6 months
    4) Stocks, bonds, mutual funds, and investment accounts calculated at 85% of account value
    5) Retirement (non 401k) accounts - Borrower under 59 1/2 = 70% of value. Over 59 1/2 80% of value
    6) Retirement 401k accounts - Maximum of 50% of borrowers vested value may be used. 401k may account for no more than 50% of borrowers total assets used to qualify
    7) All assets used must be personal. Business assets not allowed
    8) Funds from or deposits from or within a Trust Account will not be allowed
     

    ABILITY TO REPAY IN FULL Loan Program

    This program is pretty straight forward. You simply prove you have enough liquid assets to cover the loan balance.

    • No monthly income require
    • Do not have to currently be employed
    • Minimum 25% down payment
    • Purchase or Refinance
    • Owner occupied or Investment property
    • Scores as low as 600 allowed
    • Show only two months asset statements
  • Forbearance Guidelines

    If you've been in forbearance:

    • Must be at least 24 months past forbearance, with no mortgage late payments (0x24).
    • If you missed any payments during your forbearance, application denied.
    • If was in, but now out of forbearance, and all payments made, there is no waiting period.
  • SHOULD I APPLY?

    YES, but due to the nature of these loans, we will make all efforts to qualify you for a traditional loan, and discuss putting yourself into position to refinance into a traditional loan as soon possible.

    If one of these alternative mortgage loan programs fits your situation, and you meet the basic criteria above, by all means, you should apply online or call our office at (651) 552-3681 to discuss your situation.

  • History of NO DOC / Stated Income Mortgage Loans

    "NO DOC" loans had been around for years, and served a niche market for the self-employed, commission, and tipped income home owners. Because of their additional risk, they came with higher interest rates, bigger down payments, and generally were only available to self-employed people with a minimum of 2-years provable self-employment history and trouble documenting their true income.

    As the home loan markets changed through the early 2000's, these loans grew in popularity, especially once Wall Street introduced new no doc, stated income stated assets (SISA), stated income verified assets (SIVA), no income no asset, job (NINA), and other ridiculous variations with underwriting guidelines so silly almost anyone could qualify for a home loan. Interest rates on these loans became only slightly higher than regular loans, and down payment requirements dropped to sometimes even zero down!

    These new variations turned a great niche mortgage program into what became commonly known as liar loans. This was because because home buyers were easily allowed to misrepresent their true circumstances, and Loan officers were more than happy to look the other way to close a loan. Theses loans were highly abused by consumers, and bad loan officers everywhere, as people realized they could easily get a loan they either should not be getting at all, or more commonly, to get a bigger loan than they normally would have received.

    These straight up liar loans were some of the first casualties of the mortgage market meltdown that started in 2007, as many of these customers were some of the very first people to end up in foreclosure. Gee, go figure... Lenders everywhere quickly pulled them from their product lines, and Washington politicians went crazy right after that throwing up numerous rules and regulations that essentially makes these loans now impossible, or banned them completely.

    Of course the idea was to eliminate the fraudulent loans, but unfortunately, this left many manyy very legitimate self-employed, commissions, and tipped income people who truly need and benefited from these types of loans without any home financing options, especially once the Dodd / Frank Financial Reform Laws went into effect in 2010.

    As we get further away from the financial crisis of 2008, these unique portfolio loans have slowly crept back into the market.