An Asset-Ready mortgage, or asset-qualifying mortgage, allows a borrower with low income to qualify for a mortgage based on the value of his or her assets.
An Asset-Ready mortgage is an option for the purchase of a primary home, second home or investment property.
Applicants who are unable to document sufficient income to qualify for the home loan they want but who have a sizable amount of money tucked away may be good candidates for an asset-ready mortgage. If you work with high net worth or ultra high net worth clients, it’s helpful to know where an asset-ready mortgage may fit into their home or investment property buying plans.
Asset mortgage explained
Asset-Ready mortgages, or asset-qualifying mortgages, are designed to connect buyers with funding based on the value of their accumulated assets. These are non-qualified mortgages that substitute assets in place of income for underwriting and approval. No tax returns, pay stubs or W-2 forms are required as part of the loan process.
Qualification is based on the value of retirement and non-retirement accounts, including IRAs, 401(k) plans and taxable investment accounts, such as annuities, stocks and bonds, as well as money market accounts and certificates of deposit.
Who may benefit from an asset mortgage
Generally, asset-ready mortgages are designed to serve buyers who have the assets to support a loan payment but lack the income that lenders typically look for.
Some examples of buyers who may be good candidates for asset mortgages include:
- – Early Retirees. Someone who’s saved and invested diligently so they can retire at a younger age could be a good fit for an asset mortgage, including people involved in the F.I.R.E. (financially independent, retire early) movement. In other words, someone who may not have income from work, but has acquired a portfolio that’s large enough to provide income for several decades.
- – Business owners. A borrower who wholly owns a business may benefit from asset mortgage if she holds significant business assets. This type of loan could allow the borrower to preserve personal capital while leveraging business assets to buy property.
- – Modest heir/heiress. An asset-ready mortgage could be a smart option for a person who has inherited enough assets that he doesn’t have to work to earn money, but not enough to comfortably deplete by purchasing a property outright.
These are just a few scenarios where you may consider an asset-ready mortgage for a client with high net worth. The common thread is that lack of income is not a barrier to getting a mortgage.
Assets can augment loan qualification
A commitment to saving and investing can be an advantage when seeking out mortgage loans. In many cases, a buyer may use his or her assets to supplement their income to qualify for their loan, also known as Asset Depletion, with our Alt-Doc Programs.
Our Alt-Doc Conforming and Near Miss programs allows the borrower to qualify by using Full Documentation, Accountant-certified Profit & Loss Statement, and 12-month Personal and/or Business bank statements.
Asset Depletion option can be used as an add-on to help improve a client’s debt to income ratio, potentially improving eligibility for all Alt-Doc loan programs.
Quontic Alt-Doc Programs
Quontic’s Alt-Doc programs are designed for high net worth borrowers who’d rather finance a property purchase than deplete liquid assets.
A few key points to know about Quontic’s Alt-Doc programs:
- – Assets must meet or exceed 100% of debt obligations
Realistically, most applicants will need to have assets equal to at least twice the loan amount
- – Retirement and non-retirement asset accounts are allowed
- – Assets from a wholly owned business may be used to qualify for a loan
Buyers still need to meet minimum credit score requirements for Alt-Doc loans. And as with all loans, they’ll need to cover the down payment and closing costs to finalize the mortgage.
Looking at a client’s total financial picture can help you pinpoint which type of mortgage may work best for their buying needs. That’s something we want to help with. Quontic works with mortgage brokers to help find the best loan possible for your clients. Connect with us today to learn more about Quontic’s Alt-Doc programs and other loan products.