Some mortgage professionals see unconventional homebuyers as the “difficult ones.”
And, truth be told, those with more complicated financial situations can make the home loan qualification process longer and harder these days.
Enter: creativity in lending. The conventional home loan that often requires a stellar credit score and a hefty down payment isn’t the only option. Mortgage brokers — who can shop countless loan products from any wholesale lender they choose — have access to a variety of alternative home financing options. That’s all to say, “unconventional” financial situations aren’t so difficult when you have “unconventional” home loans.
Emily Tolbert, mortgage loan originator at Motto Mortgage Signature Plus, relies on alternative financing options for many borrowers. “I have seen dreams come true for self-employed people who cannot qualify for a conforming conventional loan. One of my clients struggled to qualify for the home he wanted when using his tax return income calculation. After speaking with him about the Bank Statement Loan program, I gathered 12 months of bank statements and had his income calculated at around 3 times the tax return amount. This allowed him to increase his purchase power and get into a home he now loves.”
You want to expand your homebuyer pool. You want to encourage your clients. You want them to know that homeownership might be for them… right… now. Alternative home financing knowledge can do that.
Our top 5 alternative potential home loan options
1. The Home Loan for the Self-Employed (AKA: The Bank Statement Loan)
Your homebuyers might not get a paycheck from “the man.” But that doesn’t necessarily mean they’re out of the mortgage loan game. A Bank Statement Loan may allow them to qualify with their actual cash flow instead of their tax documents.
2. The Home Loan for the City Dweller (AKA: The Jumbo Loan)
Do your buyers need a bigger mortgage loan for a home in a more expensive part of town? Many mortgage program loan limits fall short of home prices in high-cost areas. That’s where a jumbo loan might help. They’re designed to offer home loan amounts above the limits established for many other mortgage programs.
3. The Home Loan for a First Investment Property (AKA: The Cash-Out Refinance)
Have any budding investors or side hustlers in your pipeline? Reaching out to chat about potentially using their home equity to buy an investment property can expand your opportunities too. Their equity might be high right now and so are rent prices. Just saying.
4. The Home Loan for the Budget-Conscious (AKA: The FHA Loan)
Your clients have probably heard of that “more obtainable home loan” option, but they might not know it by name. The Federal Housing Administration (FHA) loan was created to make homeownership more accessible. Applicants with lower credit scores may be able to qualify (as compared to a conventional mortgage loan) and the minimum down payment requirement is just 3.5%.
5. The Home Loan for Retirees (AKA: The Asset-Based Loan)
Are your retired clients ready for their next homeownership chapters? They don’t necessarily need to let a fixed income bookmark their plans. An asset-based mortgage loan program might allow them to qualify for a home loan using existing wealth like home equity, stocks, certificates of deposit (CDs), and 401Ks.
Sure, the market is picking back up. And sure, bidding wars are becoming less of a “battle.” But home affordability remains a major challenge in the housing market (we know we’re preaching to the choir here). By brushing up on some “unconventional” home loan options, you can help guide your homebuyers to the purchase they’re hoping for.
Because let’s face it. As many times as we (the mortgage people) tell homebuyers to speak with a mortgage professional as the first step in their homebuying process, we all know they’re going to you, their agent, first. And that’s kind of a great thing… especially when you can explain what’s possible.
Hi. We’re Motto Mortgage. We’re a mortgage brokerage franchisor – that just means we’ve put a mortgage business together for you. With Motto, you can get an additional revenue stream and your customers get in-house home loan services. Plus, we’ll help with the heavy lifting so you can grow your business without having to take your eyes off your real estate brokerage.