Don't ignore non-prime!

So many times I have heard the "mortgage rules." They vary by area and the plain vanilla lenders (I know, I used to work for banks) in that area. But here are a few of the fallacies or myths spread all over the country:

1) You can't get a home loan after bankruptcy, foreclosure, short sale, etc. Non-prime is perfect for this, not only is there one day out of bankruptcy, foreclosure, and short sale, there are many lenders that simply ignore it with a larger down payment. You need a non-QM or non-prime lender to help you (like me)...

2) You have to have 640, 620, some banks even say 700 scores for their loans! (See one BIG bank's lending policy here...) No, no, and no again! Not only are there government loans going down to 580 and 600 and 620, there are also very good non-prime options EVEN TO NO SCORE! Shame on big banks for setting the rules and not informing people there are actually other options available to them...

3) You have to have 2 years of self employment or previous work in that field, or a guaranteed paycheck to get a home mortgage loan. Without trying to take on every self employed individual in the country who has received that lie, let me just say, there are non-prime lenders who accept 1099's, Profit and Loss statements, bank statements, and one year of taxes, etc. The majority of self-employed individuals with a decent or better credit score and who do earn money would be able to own the home they want without all the hassle and myths of conventional lending!

4) One of the banks that I worked for actually had a no collections policy. Any collections had to be paid to get a loan from them! No, no, and no again, that is a complete myth. Mortgage lenders in general ignore medical collections (sorry doctors) and only take regular collections as far as they have to in setting up a hypothetical payment to pay them off. In other words, it adds a little bit to your debt to income, maybe. Most of the time, it's a non-issue in approval. Shame on bankers for spreading this lie especially since the underwriting guidelines for conventional and government loans address collections but do not reject someone for a mortgage loan solely based on collection activity.

5) This is very specific, but I think it's important to add it here: in order to buy a rental property, you have to have a primary residence, have experience in rentals, and have a good solid income to afford both. Commercial lenders call this "global cash flow" or "global income" because they count everything you have. No, no, and no again, DSCR (debt service coverage ratio, a fancy acronym for rent vs. payment or rental income only loans) is the absolute best thing for an investor. It measures the loan based solely on that property making money in rent over the house payment, ignoring the "global" situation.

6) This also is very specific and I think it's important. Many people believe you can only get a home loan if you are a citizen or legal resident (10 year "green" card). No, no, and no again, from DACA to ITIN loans, to foreign nationals buying property in the United States for the benefit of their relatives or rental investments here, there are many non-prime and even normal options to meet those needs.

What's the bottom line? Non-prime lending is going to continue to grow as more people learn that they are not blocked out of the market, they are not denied access to a home loan, they can still receive what they need to provide a home for their family or add on a rental property!

I am always happy to consult on your unique situation: Find me here