A typical borrower: A non-QM mortgage scenario where a self-employed borrower seeks to consolidate debt using the equity in their primary residence. By leveraging our Bank Statement stand-alone second lien product, this borrower was able to achieve their financial goals while maintaining their low-interest first mortgage.
Scenario Overview:
Our self-employed borrower, with a FICO score of 742, desired to consolidate their debt by utilizing the equity in their primary residence. However, they preferred a second mortgage as their first mortgage already had a favorable interest rate of 4%. With a CLTV (Combined Loan-to-Value) of 85%, the borrower had a solid foundation to explore their options.
Traditional Debt-to-Income Ratio:
Upon analyzing the borrower’s net reported income on their tax return after consolidation, their debt-to-income ratio stood at 56%. This ratio, although higher than desired, did not deter the borrower from seeking a solution that would improve their financial situation.
Non-QM Solution: Bank Statement Stand-Alone Second Lien Product
Our Bank Statement stand-alone second lien product proved to be the perfect fit for this self-employed borrower. Instead of relying solely on tax returns, we allowed the borrower to submit 12 months of bank statements for income verification. This alternative income calculation method played a crucial role in improving the borrower’s debt-to-income ratio, bringing it down to 46%.
Benefits and Features:
Primary Residence CLTV: Our non-QM solution accommodates primary residence CLTVs up to 85%, providing borrowers with the flexibility they need to leverage their home equity effectively.
Debt-to-Income Ratio: With a maximum debt-to-income ratio of 50%, our non-QM mortgage product allows borrowers to consolidate their debt while maintaining a manageable financial position.
Bank Statement Features: Self-employed borrowers can take advantage of our 12-month bank statement feature, which eliminates the need for tax returns and provides a more accurate representation of their income.
Second Home and Investment Properties: We extend our non-QM mortgage options to second homes and investment properties, with CLTVs of up to 70%.
Cash-Out Refinancing in Texas: Borrowers in Texas can benefit from our cash-out refinancing option, enabling them to access their home equity for various financial needs.
By utilizing our Bank Statement stand-alone second lien product, this self-employed borrower successfully consolidated their debt while preserving their low-interest first mortgage. The alternative income calculation method based on bank statements allowed for a more favorable debt-to-income ratio of 46%. This scenario highlights the advantages of non-QM mortgages, providing flexibility and tailored solutions for borrowers with unique financial circumstances.
Contact us for more information about our second-lien mortgage programs.
