No W2? No Problem.
When the flowers start blooming, so does the housing market. Spring season is historically THE hot season in this industry; when sellers want to sell and buyers want to buy. It makes sense when you think about it—in the winter, we’re likely to be either in holiday mode or staying inside to avoid the cold (unless you’re Ray Duran, our Regional Sales Manager in Miami, where the year-round housing market appears to be strong).
But when springtime rolls around, we want to go out and we want to see houses. Plus, those properties look even nicer without mounds of snow in the way.
Because it’s expected to be a hot market, you have to be quick. It’s all about supply and demand. Lately, we’ve seen an abundance of inventory AND an abundance of buyers. The theory is: if there’s more supply in the market, housing prices should be lower. If a buyer has more options, they have a better ability to negotiate on the home prices. They’re not stuck looking at one or two properties to choose from. Conversely, when there is more buyer demand than home supply, options are fewer and sellers are able to secure higher prices. In either case, buyers who act quickly have better odds at securing their dream home at favorable terms.
Thing is, you have to be prepared. That’s easier for some (i.e. traditional borrowers) more than others.
I’ve previously written about the importance of the pre-approval process and where to look for a mortgage loan if you’re a first-time homebuyer. I wrote about what I’ve seen happen time and again: buyers’ eyes become bigger than their wallets. So, no matter what type of borrower you are, it’s important to know upfront how much home you can afford. With that, you need to understand your budget in terms of how much you’re putting down, how much you can pay on a mortgage every month, and what kind of credit history is required.
The already complicated process of determining your mortgage eligibility becomes even more challenging if you earn nontraditional income. I’m talking about our gig-economy workers (rideshare drivers, construction workers, nannies, etc.), our small business owners, and our entrepreneurs who have varying levels of income. With regulation and mortgage requirements, you’ll notice immediately how cumbersome the mortgage documentation preparation process can become.
What’s exciting about Quontic is that we’re a Community Development Financial Institution (CDFI) which enables us to responsibly help millions of diverse, underserved borrowers. It also affords us the ability to offer prime, creditworthy borrowers with access to credit through common sense underwriting. This simplifies the home loan process entirely. Two such products are our Lite Doc and No Ratio loans, or Community Development Loan (CDL) programs. These loans can be extremely beneficial for someone who’s a small business owner whose tax returns might not paint the entire picture.
To clarify, we don’t make mortgage loans without documentation, but we make loans that consider the totality of a borrower’s application, such as down payment, credit history, source of income, etc. It’s a Lite Doc approach designed for these potential homeowners. For some, the traditional rigid income documentation requirements of most lenders might unfairly disqualify them from getting a loan. But at Quontic, we can simplify the documentation requirements and rely on other time-tested metrics to determine one’s ability to repay a mortgage.
So you do need some documentation. For example, business owners need to be able to verify through an accountant their status as a business owner for at least one year, and in the same line of work for two—and that provides relief from our having to rely strictly upon your past two years personal and business tax returns. We’re asking for a letter as opposed to a tremendous amount of paperwork. So that, in itself, is a gamechanger. And, of course, good credit and skin in the game is a must!
Speaking of credit, we don’t require excellent credit—we accept scores as low as 660 with higher down payments. We also need a decent down payment—at least 20%. But again, we’ve made the criteria flexible to meet the circumstances of our unique borrowers. We’ll also accept that downpayment in the form of gifts from family members.
When it comes down to it, our most successful clients do have good credit and can make a meaningful equity contribution (down payment) when buying a home. Based on historical loan performance data, these are good, paying borrowers. They are responsible individuals for whom Quontic’s mission-driven flexibility has been able to open up opportunities for homeownership. No tax returns? This may not be a problem.
Is this the year you buy? We’d love to help you get there. Give us a call at 1-718-215-4054 to get started.