The Letter X – Issue #30
When the refi boom dries up, where will you turn? I’ve shared some of my best tips on marketing and building your non-QM business, now let’s talk about some of the core products that borrowers are turning to:
Bank statement loan
Bank statement loans account for about 60% of non-QM originations. Right now, these loans typically rely on a borrower’s 12 or 24 months worth of bank statements to determine whether they qualify and assess a borrower’s ability-to-repay. These loan products are suited for self-employed borrowers (business owners, gig economy workers) who are unable to prove ATR via tax returns and/or W-2 forms.
Investor Cash Flow Loan
Professional investor loans, also known as investor cash flow loans, are for property investors specifically. These loans qualify a borrower’s ability-to-repay based on the Debt Service Coverage Ratio (DSCR) which uses the property’s value, rental analysis and the income the property will eventually generate. With single-family rentals increasing in popularity, this product is growing in tandem.
No personal income or employment information is required to qualify. It helps you close more loans and diversify your clientele. It also helps property investors grow their portfolios faster.
Portfolio Select Products for borrowers with credit blemishes
Going forward, there will likely be a higher demand for true non-QM loan products that are sensitive to a borrower’s credit score. These loans could grow in necessity in the future as borrowers could have taken dings to their credit score due to the economic impact of COVID, preventing them from qualifying for an agency loan.
Please remember that I and the Angel Oak family are always here to help if need be!