At our office, we take a special pride in providing a variety of unique loans; options that may not be available with other groups. These loan products allow us to serve many borrowers who would otherwise be left without financing. Some are intended for the purchase of a primary home, while others are for second homes or even investment properties. All increase your chances of approval on the mortgage loan you need.
Why do Specialty Loans Matter to a Borrower?
All of this might seem trivial. Why does it matter if a lending agent has access to, or is more experienced with, speciality loans. After all, the vast majority of borrowers won’t use these unique forms of financing; why should the typical homebuyer care?
Because working with a lending agent who has access to a variety of loan options can significantly enhance your chances of approval. While you may never use them, working with a lender who offers plenty of options allows you to be highly selective in your financing. For example, if you are self-employed and don’t receive a consistent income, working with a lending agent who can use bank statements for qualification will increase your chances of approval.
5 Unique Loans That Increase Your Chances of Mortgage Approval
1. Loans for Investment Properties
If you are like most people, you want to build a strong financial portfolio of investments. You likely use 401(k), investment accounts, mutual funds, and a variety of other options to ensure a comfortable future. You’re probably not out to build a life of opulence, you simply want a solid nest egg.
One of the more popular ways to build your financial future is through investment property. Owning property, while high on both effort and risk, can be one of the most lucrative forms of investments. But there is an obvious problem: the entry price. To start a stock portfolio, you really only need a couple hundred dollars (or less, depending on the account). But to purchase an investment property, you’ll likely need hundreds of thousands of dollars; even if you have the money, you may not want to place everything in a single property and loose the flexibility and security liquid cash.
Using investment-property loans, on the other hand, allows you to both enter the real estate market and maintain savings for other purposes.
2. Financing for an Owner-Occupied Second Home
Statistically speaking, owner-occupied second homes come with a higher risk for lenders. This is because, in the event of a financial emergency, most people will protect their personal home while letting the second home go into default. (If you could only afford one payment, which would you pay: the mortgage on your family home or vacation property?)
Because of the higher risk, many lenders avoid these properties. If they do offer financing, it may come with inferior terms, such as high interest rates. There are numerous advantages to owning a second home, but financing is simply more difficult, which is why you need to work with a lender who understands how to reach excellent terms on loans for these properties.
3. Loans Using Alternative Forms of Income
Most borrowers can easily qualify for a loan using traditional documents. Bring your paystubs and tax returns and (assuming your ratios are strong and your credit is high) you should be approved for a mortgage.
But what about retirees who receive income from pensions, Social Security, and IRA accounts? What about self-employed business owners or commission-based professionals such as sales associates? Determining an income is not so simple for more and more homeowners, so lenders who can work with unique incomes are in high demand.
From alimony payments to IRA distributions, no matter what the source of your income, we can work with you, using a common-sense approach to mortgage underwriting to increase your chances of approval.
4. Jumbo Loans with a Minimum Downpayment
“Jumbo loans” are defined as loan that is above the limits set by the Federal Housing and Finance Agency, a limit that is used in a variety of different options. Limits are set by county; the minimum limit, called the “baseline limit,” is currently $484,350. This means that no matter where you live, most government-sponsored loans will have a limit of $484,350. However, there are higher limits for areas with higher costs. San Diego County, for example, has a limit of $690,000.
Yes, $690,000 is a large sum of money, but if you have shopped for houses in the San Diego market, you know that this total leaves many properties unavailable, even with a sizable downpayment.
If you are looking for a home that is above the limits set by the FHFA, you should work with a lender who not only provides jumbo loans, but offers jumbo loans with a minimum downpayment. This will create greater access to many homes, while lowering the amount of available cash you need to qualify.
5. Loans Using Bank Statements Instead of Paystubs or Tax Returns
As we discussed earlier, there are many loan options available to people who don’t have the typical forms used for income verification. One of the most popular strategies is to use bank statements, which can be far more accurate and reliable from an income-verification perspective.
Bank statement loans are particularly popular for self-employed individuals who don’t receive regular paystubs and can’t use tax returns to verify income accurately. Using bank statements, we can see how much you bring in, how much goes out, and what totals you have sitting in your accounts. This can help us create an accurate picture of your financial situation, and in many cases we can get a borrower approved with as little as two years of bank-statement information (or less in special situations).
Unique Loans for Virtually Any Borrower
If any of these unique loans seem useful to your special situation, contact our staff today. We’ll help you find the right product for your needs, whether you are looking to purchase an investment property or simply want to buy a home that is above the typical loan limits.
With these unique loans, you have a better chance at purchasing the property you desire at a price you can afford!
