In my last blog post – Non-Traditional Mortgage – What It Is & The 3 Types, I have briefly explained the non-traditional mortgage. Now, in this blog post, I’ll explain why a non-traditional mortgage is perfect for you.
5 Reasons Why a Non-Traditional Mortgage is for You
1. Doesn’t Require Income Statements
While applying for a traditional loan, you’ll have to show an income statement to the lenders. But for non-traditional mortgages, you won’t have to show such statements.
As a small business owner, you have the luxury to generate revenue from your own belongings along with your business products. For example, many small business owners list their items for rent to increase their monthly revenue. But unfortunately, often, those small business owners fail to include that additional revenue in their income statement and don’t qualify for a traditional mortgage.
If you have such sources of income, you can apply for a non-traditional mortgage.
2. Immigrant Friendly
A recent study has shown that immigrants have added around $4 trillion to the US housing wealth. That being said, still today, house ownership is difficult for immigrants. This is primarily because of the qualification, language barrier, and lengthy approvals. These also apply to minorities who want to live in their own house.
Here, a non-traditional mortgage comes as a savior. The non-traditional loan requires minimum qualifications and doesn’t take that long. Besides, unlike traditional mortgages, the non-traditional loan is flexible and gives more freedom to the borrowers. That’s why more and more immigrants are considering a non-traditional mortgage for purchasing their first piece of real estate.
3. No Income? No Problem
If you have recently lost your job but want to take a home loan out, the traditional loan system won’t help you with that.
Most traditional mortgages will require at least a one-year income statement. That means if you have been out of a job for one month, you won’t be able to apply for a traditional loan for 12 months. But the non-traditional mortgage doesn’t follow this no income, no loan strategy. As a result, you can still get a loan even when you have recently lost your job.
4. Poor Credit Score or Bankruptcy Isn’t a Problem
If you want to apply for a traditional mortgage, you’ll require a high credit score. Besides, bankruptcy is not a big problem. For traditional mortgage, once you file bankruptcy, it’ll be a financial death for you. But when it comes to non-traditional mortgages, you can still get a loan even if you have filed a bankruptcy or have a low credit score.
5. Doesn’t Take Debt to Income Ratio into Account
The traditional loan system checks the credit score ratio. But it’s not possible to maintain a perfect DTI ratio all the time. If you’re struggling with a high debt to income, you can apply for a non-traditional mortgage.
Conclusion
Before taking a non-traditional mortgage, you should know that you may have to pay more interest than traditional loans. Also, the price of real estate can fall any day. That’s why before taking a non-traditional mortgage, you should do your homework and analyze the risks.
