Author Topic: Experience with Asset Based Lenders?  (Read 441 times)

Aegishjalmur

  • Stubble
  • **
  • Posts: 240
Experience with Asset Based Lenders?
« on: November 02, 2020, 07:53:10 PM »
Thinking about all the issues that FIRE'd people have getting mortgage loans with traditional lenders, I was curious if anyone on here has ever used a Non-QM asset based mortgage to finance the purchase of a property?

Below is a link to the guidelines for one lender that I was able to find. If these are pretty typical, I would think this could be a good option for us FIRE'd folk.

https://impacwebcdnprod.azureedge.net/assets/documents/Guidelines/NQM%20Asset%20Qualification%20Program%2010.1.20w.pdf

I pulled out the relevant section on assets below:


Documentation Requirements: Six (6) months of statements for accounts which are being used towards
funds to close and the post-closing reserve requirement. Balances must be verified within 10 days of closing.
DTI: A traditional DTI is not calculated for NQM Asset Qualification. Rather, the borrower(s) must have
sufficient post-closing liquid assets ≥ the sum of the items noted below:
           100% of the loan amount;
           60 months of all revolving, installment, alimony/child support, and mortgage related expenses;
           Subject property reserves requirements based on loan amount as detailed in the Reserves section of
this matrix; AND
           Additional financed property reserves as detailed in the Reserves section of this matrix.

Eligible Asset Types:
Assets can be cash in the bank, stocks, bonds, IRAs, 401Ks, mutual funds or retirement accounts. For most
asset types, this would include all pages of the most recent six (6) months. Asset levels in the verified accounts
are expected to be consistent and sustained over the six (6) month period. Increases or decreases of greater
than 15% over the six (6) month period (i.e., compare month 1 to month 6) must be explained by the borrower.
Additional supporting documentation may be required.
       Bank Deposits – Checking, Saving, Money Market accounts = 100%
       Publicly traded stocks and bonds = 70% (stock options not allowed)
       Mutual Funds = 70%
       Retirement Accounts (can only be used if distribution is not already set up)
                    o 401(K) plans or IRA, SEP or KEOUGH accounts = 60% if not retirement age, or 70% if retirement age and no early withdrawal tax penalty applies.
       Cash value of a vested life insurance policy = 100%


So, has anyone here used one of these companies? Did it work well? Any issues or downsides? What were the rates like compared to traditional mortgages?

jpdx

  • Pencil Stache
  • ****
  • Posts: 555
Re: Experience with Asset Based Lenders?
« Reply #1 on: January 03, 2021, 01:30:50 AM »
I'm interested in going this route for a refi, however, paying increased rate might make it not worthwhile:

Non-QM loans can have higher mortgage rates than a 30-year, fixed-rate mortgage.

“Spreads can be as little as .25 percent and as much as 5 percent, depending on the terms of the transaction and the risk of the borrowers...On average, spreads are closer to 1.25 percent.”

https://www.bankrate.com/mortgages/non-qualifying-mortgages-qm/