The Future of Non-QM Financing
From refinancing to purchasing a home and more, many potential borrowers may be worthy of loans but just don’t meet the standard criteria. They might just find a perfect fit in Non-QM products. Let’s look at who they are and how their future lending needs can be served by Non-QM.
A growing market that deserves attention.
Until recently, Non-QM loans have flown somewhat under the radar. However, that’s all changing. In 2021, we saw mortgage origination with Non-QM lending at around $25 billion. Some analysts say the market is on track to hit $50 billion a year by the end of 2022. So now’s the time to start offering potential borrowers Non-QM products.
Mortgages that are tailor-made for the gig economy.
A trend before the pandemic hit, the number of non-traditional earners climbed sharply with the onset of the coronavirus. Now, around 48% of people in the private workforce are self-employed contractors, small business owners, and gig economy workers. Many don’t fit the standard mortgage mold. Take, for example, people who own their own businesses; their tax returns often do not reflect an ability to make mortgage payments in the way that the returns of salaried employees do.
Lots of these folks may not qualify prime mortgage loans, which generally rely on traditional income verification methods. So millions of possible borrowers may be right for Non-QM loans.
Rising real estate trends favor Non-QM products. Let’s look at a few:
- According to the National Association of Realtors, over one-third of homebuyers in 2021 were first-time buyers, a 3% increase over 2020, with no signs that the housing market trend will drop. Typical first-time buyers are around 33 years old; Millennials who are more likely to have non-traditional incomes and potentially benefit from Non-QM financing.
- As ever-increasing rent prices look to stay on an upward trajectory, so too should the number of people looking to purchase rental properties as investments, wishing to get in on this profitable and growing sector. Perfect for Non-QM products.
- Today’s workforce increasingly manages multiple vocations. Not all self-employed individuals are working nine to five at a business they own – many have an income generating side hustle, multiple part time jobs, offer their services as a contractor in their spare time…the list goes on. When it comes time to buy a home Non-QM loans could be a great option for this group – allowing them to add to their buying power using all income streams for qualification.
Luxury Mortgage Wholesale’s Simple Access® suite of Non-QM products may be the best way for you to get in on this lucrative market. Finding out how is just a phone call away.