Frequently Asked Questions
Looking for answers to common questions? Find it here.
1. What is a Non-Qualified Mortgage (Non-QM) Loan?
A Non-Qualified Mortgage is any home loan that does not comply with the Consumer Financial Protection Bureau’s (CFPB) rules on what is a Qualified Mortgage. A Qualified Mortgage (QM) is a home mortgage loan that meets the standards set by the federal government by way of the Consumer Protection Act after the financial crisis. Some examples of what limitations are place on a Qualified Mortgage are:
- No Interest Only (IO) Loans
- No Negative Amortization Loans
- No Balloon Payments
- No Terms longer than 30 years
- Maximum Debt to Income ratio of 43%
2. Do I need good credit to get a mortgage?
Not necessarily. If your credit has been negatively affected, you can still qualify for a mortgage. If you have equity in your home and you pass Ability To Repay (ATR) tests you can access capital under a variety of loan programs. OptionWide can help you assess your situation and pick the best loan you qualify for.
3. What is the Ability to Repay (ATR) rule?
Underwriters must consider the following factors about a borrower’s ability to afford the loan while originating the mortgage:
- Borrower’s Employment Status
- Borrower’s current level of income and amount of assets
- The monthly payment on the new loan
- The monthly payment on any other choice of loan
- The monthly payment for all mortgage related obligations
- The borrower’s other current debt obligation, alimony and child support
- The borrower’s monthly debt to income (DTI) ratio or residual income
- The borrower’s credit history
4. What type of documentation is required?
OptionWide offers programs that require different types of documentation. Our Credit Refresh and Prime Advantage programs require that all income and assets must be verified in order to determine your ability to repay the loan. Those products have options that allow for W2, tax returns as well as bank statements to verify your income. OptionWide also offers a distinct, equity based loan program called Equity Advantage, which only requires that you are current on your mortgage and that you have sufficient equity in the home.
5. What if I have a mortgage late?
Our flexible loan programs allow us to make loans where there was a previous mortgage late. Your credit rating is one factor that determines your interest rate. We allow for mortgage late payments, however payments on your existing mortgage must be current at the time of your new loan application.
6. What if I had a bankruptcy, short sale, or foreclosure?
Our flexible loan programs allow us to make loans where there was a previous bankruptcy or foreclosure. You must be current with your mortgage payments at the time of your new loan application. There are other restrictions that also may apply. We do not finance any foreclosure bailouts.
7. What can I do to rebuild my credit?
There are several things that people with damaged credit can do to improve their financial condition. Here is a list of the most impactful ways to start making that improvement:
- Check your credit report
- Arrange to catch up on your payments
- Pay bills on time moving forward
- Try to avoid closing credit card accounts
- Pay down debt
- Use a secured credit card (one that is linked to a savings account)
- Obtain an installment loan (such as a mortgage)
- Practice good financial habits
8. Can I refinance and take cash out?
Yes. The main purpose of this loan is to provide reasonable financing terms that will allow consumers to access the equity in their homes and consolidate their debt into one affordable monthly payment. Loan-to-Value restrictions apply.
9. Can I purchase a home?
Yes. There are loan-to-value restrictions when purchasing a home depending upon the loan program and your credit. Other restrictions may apply depending on your credit profile.
10. How competitive are your rates and fees?
Our rates and fees are slightly higher than traditional prime loan pricing but substantially lower than hard money loan pricing. Rate is determined by loan-to-value, your credit profile, and your mortgage payment history. We have standardized fees.
11. How long does the process take?
It typically takes 30 business days to fund a loan. Appraisals can affect the time that is required for a loan to fund. Additionally, depending on the nature of the credit, there may be other issues that need to be addressed with external third parties. OptionWide will work with you and those parties to facilitate the processing of the loan.
12. Are there any prepayment penalites?
Prepayment penalty options are only available for investment properties. There are no prepayment penalties allowed on primary residence loans.
13. Can I roll in my closing cost?
Closing cost maybe rolled into a loan if there is sufficient equity to do so.
14. How do I know which type of mortgage is most appropriate for me?
There is no simple formula to determine the type of mortgage that is best for you. This choice depends on a number of factors, including your current financial picture and how long you intend to keep your house. OptionWide can help you evaluate your choices and help you make the most appropriate decision.
15. What is the difference between a fixed-rate mortgage and an adjustable-rate mortgage (ARM)?
With a fixed-rate mortgage, the interest rate stays the same during the life of the loan. With an ARM, the interest rate changes periodically, typically in relation to an index. While the monthly payments made with a fixed-rate mortgage are relatively stable, payments on an ARM will likely change over time. There are advantages and disadvantages to each type of mortgage. OptionWide can help you understand these differences and enable you to make the selection that works for you.
16. How is an index and a margin used in an ARM?
An index is benchmark interest rate that lenders use to set the rate for an ARM. Generally the interest rate that you pay is a combination of the index rate and a pre-set margin that is added to the index. Three commonly used indices for ARM rate calculations are the One-Year Treasury Bill, the cost of funds of the 11th District Federal Home Loan Bank (COFI), and the London Inter-bank Offer Rate (LIBOR).
17. Should I get a 15-year or 30-year term loan?
This depends on how much you want to stretch your budget. If you can afford the higher monthly payments, a 15-year mortgage usually comes with a better interest rate than a 30-year version. Not only will you pay off the house quicker, but you can save a tremendous amount of interest. On the other hand, a 30-year mortgage will cost less per month, allowing you to afford a bigger or nicer house, or one in a better location.