High Standards in Non-QM Lending
Before the crisis of 2008, non-QM mortgages were often seen as risky, and sometimes even unethical. Some of that reputation remains, despite massive changes in regulation, but more and more lenders are improving public perception with high-quality, ethically driven mortgage products that help commercial buyers and non-traditional workers alike. More people than ever are seeking alternative loans to purchase homes, and that means that lenders have had to adapt to changing demand. As these institutions find ways to work with customers that may not have traditional documentation, undocumented sources of income, or capital tied up in other ventures, the industry as a whole follows suit. This means that once rare and risky loan models are become safer, more common, and more accessible!
Non-QM loans still represent some increased risk for the lender, and typically involve higher interest rates, more stringent application requirements, and higher down payments. Unlike the past, however, both lender and borrower have more protections and more systems in place to ensure a satisfactory outcome for all parties.
Lenders are also making efforts to provide a greater level of customer service, offering "one stop shop" mortgage products that go from origination through servicing. This creates peace of mind for borrowers and sets higher standards throughout the industry. Overall, the demand for non-traditional mortgages has made the industry more agile, where lenders can work with the unique needs of each customer to assess risk and develop products to meet those needs. As standards get higher, and more people have successful, positive experiences securing non-QM loans, they become increasingly available for others - and lenders are able to expand their customer base. This ever-changing industry is headed in a great direction, largely spurred by the loan types that were once considered the most problematic. Now is a great time to be a non-traditional home buyer!