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Why non-QM borrowers aren’t going away anytime soon

DDA Mortgage • November 16, 2022


While originations are down due to a volatile mortgage market, the population of underserved borrowers who require non-QM products is on the rise.


There will always be a population of borrowers who cannot qualify for a home loan under traditional guidelines. This significant pool of clients includes self-employed, real estate investors and those with credit events.


Prospecting for these borrower types can help protect your business during market shifts. Originators who actively work within the non-QM space are closing additional loans every month.


A look at non-QM borrower profiles


Self-Employed: According to Upwork, there is an estimated 59 million self-employed workers in the U.S. and growing.


This includes 1099 and gig economy workers. That is a lot of potential borrowers. The challenge these borrowers face is typically not being able to use their tax returns due to large tax write-offs. They can afford the home and often have good to excellent credit. But their tax returns are not reflective of their true financial situation. They need an alternative solution to verify their accurate income and ultimately their ability-to-repay. The solution: Bank Statement loans. 


Angel Oak’s Bank Statement loan is ideal for the self-employed.

  • Loans up to $3 million
  • 12 or 24 months personal or business bank statements allowed
  • 1099 earning statements accepted
  • Two years seasoning required for bankruptcy, foreclosure, short sale or deed-in-lieu

Real Estate Investors:  The volume of investment properties has outpaced the purchase of primary homes throughout 2022.


Any originator who has offered a DSCR Investor Cash Flow loan to their investor clients is very happy they did! We have closed multiple deals at one time for the same real estate investor. Many originators have called us to close a cash-out refinance and a purchase for one borrower. They call us because we allow what Fannie and Freddie do not. We help investors buying their 22nd property and those needing to title in an LLC.


Marketing to real estate investors is lucrative regardless of the market. Seasoned investors will find ways to continue to build their portfolios. They know where to find deals and how to make the market work in their favor. They also know originators to trust to get them to the closing table quickly. 


Angel Oak’s DSCR Investor Cash Flow loan is ideal to close real estate investors.

  • Loans up to $1.5 million
  • No personal income or tax returns required
  • Qualifies on the cash flow of the property
  • No limit on total number of properties
  • Investors can title in an LLC

Credit Challenges: Borrowers who have recovered from a foreclosure or bankruptcy do not have wait seven years to get a mortgage. Successfully close credit-worthy borrowers with one of our non-QM loan products.


Angel Oak’s Full Doc Portfolio Select is ideal to close borrowers with credit issues:

  • Loan amounts up to $2 million
  • One year seasoning for foreclosure, short sale or deed-in-lieu
  • Two years seasoning for bankruptcy
  • Two years seasoning for bankruptcy
  • Owner-occupied, second homes and investment properties





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Is it time to prequalify for a mortgage now

By Didier Malagies • January 20, 2025
1. Assess Your Financial Health Credit Score: Check your credit score (usually 620 or higher is required, though higher scores get better rates). Debt-to-Income Ratio (DTI): Calculate your monthly debt payments compared to your gross monthly income (lenders typically prefer a DTI below 43%). Savings: Ensure you have enough for a down payment (typically 3-20%) and closing costs. 2. Gather Financial Information Lenders will need the following: Proof of income (pay stubs, tax returns, W-2s/1099s). List of assets (savings, investments, retirement accounts). Details of current debts (credit card balances, student loans, etc.). 3. Choose a Lender Research different lenders, including banks, credit unions, and online lenders. Compare prequalification options (many allow online applications). 4. Complete the Prequalification Process Fill out the lender’s prequalification form (online, over the phone, or in person). Provide basic details about your income, debts, and assets. 5. Review Prequalification Results The lender will give you an estimate of the loan amount and potential interest rate. Remember, prequalification is not a guarantee of approval and doesn’t involve a hard credit inquiry. 6. Follow Up with Preapproval If you’re serious about buying, consider getting preapproved, which involves a more in-depth review and is stronger than prequalification. Tips: Use online calculators to estimate affordability before reaching out to lenders. Avoid large purchases or opening new lines of credit during the prequalification and preapproval process. Would you like details on specific lenders or tools to compare mortgage options? tune in and learn at https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

USA Today: If Social Security falters, reverse mortgages could be worth a look

By Didier Malagies • January 13, 2025
Many retirees have said they rely largely — and sometimes entirely — on Social Security benefits as their primary income stream in retirement . But in instances where these payments may not be enough to make ends meet, other options should be considered — and in the right situation, a reverse mortgage could be one such option.  That’s according to a column published this week by USA Today , which assessed reverse mortgages in tandem with options such as personal savings, a part-time job and other benefits programs. “A reverse mortgage is a possibility for seniors with substantial equity in their homes,” the column stated. “It essentially enables you to borrow against your equity, and you aren’t required to make any payments while you’re still alive as long as you live in the house.” The column is likely referencing the Home Equity Conversion Mortgage ( HECM ) program insured by the Federal Housing Administration (FHA). Loan proceeds are dependent on the amount of equity in the home and current interest rates, the column noted, and there are multiple disbursement options available, the column noted. The minimum age requirement of 62, a core tenet of the HECM program, was also mentioned. “There are closing costs and other fees, and you’ll still be responsible for maintaining the property and paying the property taxes and homeowners insurance,” the column noted. It characterized the loan as a “solid option” for those who have few other assets beyond their homes, adding that “it might not be the right move if you intend to pass the property on to your heirs someday. After you pass away or move out of the home, you or your estate will have to repay the loan. This will reduce how much your heirs receive.” Recent survey data from Clever Real Estate highlighted some realities of relying on Social Security benefits in retirement. Roughly one in five respondents in the 1,000-person survey said they rely exclusively on Social Security benefits as their sole income stream in retirement, with nearly 30% saying they believed they would be able to rely on them. Last year, data from Nationwide suggested that an increasing number of older investors believe that retiring at the age of 65 is no longer a realistic option . This is largely tied to higher levels of stress they’re feeling about the economy and the cost of living.

Is it a good time to buy a home

By Didier Malagies • January 13, 2025
Deciding whether it’s a good time to buy a home amid higher interest rates depends on several factors. Here are some considerations to help you make an informed decision: 1. Your Financial Situation Affordability: Higher interest rates generally lead to higher monthly mortgage payments, which could impact your ability to afford a home. If you have a stable income and can comfortably manage these higher payments, it might still be a good time to buy. Down Payment & Savings: A larger down payment can reduce your loan size and help lower the impact of higher interest rates. If you have substantial savings, it could make sense to buy now, as you’ll likely have more equity and lower monthly payments. 2. Long-Term Investment Housing Market Trends: If you plan to stay in the home for several years, you might benefit from the property appreciation over time, even with higher interest rates. Historically, real estate tends to appreciate in value over the long term, although this can vary by location. Refinancing Opportunity: If interest rates eventually drop, you may be able to refinance your mortgage later at a lower rate, reducing your monthly payments. 3. Market Conditions Home Prices: In some areas, home prices have been high due to increased demand, so you may still face elevated prices despite higher interest rates. It’s worth considering whether you’re willing to pay the current asking price for homes in your area. Seller Motivation: In a high-rate environment, some sellers may be more willing to negotiate, especially if they’re facing longer time on the market. You might have more room to negotiate on price or terms. 4. Personal Goals If owning a home is important to your personal goals and lifestyle, it might make sense to move forward, even if rates are high. However, if your plans are more flexible and you can wait for a more favorable rate environment, it could be worth waiting. 5. Alternative Financing Options Adjustable-Rate Mortgages (ARMs): Some buyers opt for ARMs, which start with lower rates that can adjust after a certain period. This might be a way to secure a lower initial rate, but you should be comfortable with the possibility of future rate increases. Other Financing Programs: There are some government-backed programs (like FHA or VA loans) that may offer lower rates or down payment requirements, depending on your eligibility. Conclusion: It’s a mixed scenario. Higher interest rates generally make it more expensive to borrow, but if you’re financially prepared, plan to stay in the home long-term, and can find a property at a fair price, it could still be a good time to buy. On the other hand, if you’re concerned about affordability or want to wait for rates to decrease, it might make sense to hold off. Always consider speaking with a financial advisor or mortgage expert to get personalized advice based on your situation. tune in and lat earn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329 
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