After the meltdown in 2008, all of the goofy loan products that got us into the financial mess that tanked the real estate market, and our economy as a whole, disappeared. The pendulum swung way too far from “let’s give anyone a mortgage” to the other extreme of “only the best of the best will get loans”.
I think we as a society can all agree that it may not have been a wise business practice for a bank to loan 100% of the purchase price on a property to someone with poor credit and who could not document their income. But there should be some middle ground for investors willing to get a higher interest rate by taking on a little more risk.
That’s the philosophy of new set of loan programs designed specifically for people that fall outside the guidelines established in contemporary mortgage loans, such as those sold to Fannie Mae and Freddie Mac. We now have access to lenders that see stability in the housing market and are willing to offer loans on scenarios that were laughed at just a couple of years ago. Is this a repeat down the road to economic ruin once again? I don’t believe so. Under the new rules, these loans are risk-critiqued carefully. But since these new programs have been carefully created, the likelihood of default is significantly lower than prior to 2008. Also, these loans are not sold to Fannie or Freddie. That means no government bailouts!
So what’s available? All kinds of great products! Please note that many of these cannot be combined.
95% financing up to $3,000,000, and no mortgage insurance.
Interest-Only loans are back.
No waiting period from derogatory events such as a Bankruptcy or foreclosure allowed.
Only one year of tax returns to document income.
Income based on 12 months or 24 months of bank statement deposits.
Unlimited cash-out and purchase financing loans to $5,000,000.
None of the new programs are stated income loans or no-doc loans. Unlike in the pre-2008 era, these loan programs have been scrutinized to make sure they don’t end up as foreclosures. Despite what many people think, the last thing a lender ever wants to happen is a foreclosure. In a foreclosure, the lender always loses money.
If you feel you could benefit from a loan that is “out of the box” please let me know.