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cgraz1187

Non Qualified Mortgage Lenders

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I am currently looking for a Non-QM mortgage lender, my mortgage fico scores are just at 600 due to past collections from years ago. I just did a pay for delete on 3 collections totaling $8000 and one paid collection for $3500. I know these will help my score but the issue is they will not report quick enough. I am self employed, I show $98k a year on taxes due to many deductions. I have $160k in cash reserves and I just signed a deal to sell my current home and have 30 days to close,owned outright for $170k, so I will have over 300k in cash. Currently looking at house in the 399k range and would like to put 50% or 200k down. Any suggestions for a non-qm lender?

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I don't know of any Non-QM lenders who do business directly with consumers.  Due to the high risk that interacting with a consumer carries, they usually like to shield themselves by requiring loans to be submitted by mortgage brokers, so the loan officer takes some of the risk + takes care of communicating with the borrower.

 

With a 600 credit score Non-QM lenders typically require at least 20% down and max the DTI out at 50%, so it seems like you should be able to find a mortgage broker who'd be able to help.

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It seems to me that, if your debt to income ratios fit,  an FHA  lender

might work with you. They work with 580 scores, actually down to 500 now with larger down payments, unless the lender has an overlay. (there are lenders with NO overlays out there)  If your collections are over a year old, you have income, reserves and the loan is under their limit? I May be missing something of course, not being in the mortgage business.

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My middle score is 593, now I did speak to a Non-Qm lender who says they go to 55% on DTI with 6 months cash reserves and scores down to 500. My DTI would be 45-50% depending on the purchase price, at least 50% down maybe more. Another lender suggested I send him the Pay for Deletion letters and the Zero balance letters from my paid off credit scores and he said he would do a rapid re-score? 

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A rapid rescore is just that, they'll take documentation from the creditor, send it to the credit bureaus, where your reports and scores will be updated in 3-5 business days.   Then your credit is re-checked to get the updated credit scores and history.

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Check out some of the mortgage brokers out there. I just bought a house 2 months ago, and shopped around 8 different lenders.  Some of the local guys were hitting me at 5.625%, but I managed to find a couple out of town that were offering 4.25-4.5% going FHA. My score wasn’t great, my middle score was a 634.  The brokers may be your best bet for a sub 620 score, but keep in mind there are so many other variables they consider.

 

There are a number of mortgage lenders that do the rapid rescore like others have said, and that will help. 

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Thanks for all the input so far, I have run a hundred different options through my head but would like some input on what I feel may be my best option.

 

I talked with a mortgage broker and he wants to go FHA unless my score gets over 620 in the near future. With 50% down, my DTI is almost 55% due to 2 open auto loans, I also run into the problem of taxes owed of around 40k, which I an pay without an issue but...

 

If I end up putting 28%, I can use cash on hand to eliminate tax debt, and eliminate both open auto loans reducing my monthly payments by $1450.00 and increasing mortgage payment by around $500, bringing my DTI to under 50%. I obviously want to pay these auto loans off as close to closing as possible so they do not impact my score in a negative way. Can they do a mortgage contingent upon proof of paid auto loans just prior to closing?

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They can do a mortgage contingent upon the auto loans being paid off at closing.  Just make sure they are loans, not leases, since usually when paying off leases the underwriter won't exclude the payment since they know you'll need a new car (+ it's payment) after turning the lease in.


With a score below 620 it's very likely you'll need a DTI under 50% to qualify for FHA.

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