While traditional lending is a go-to option for many borrowers, it’s not always the best solution for everyone—especially in today’s market. With the workforce being so diverse (hello, freelancers and small business owners!) and including those with substantial assets but inconsistent income (think retirees), there’s no “one size fits all” solution for financing. That’s why brokers are turning to an alternative product: Non-QM loans.
One particular Non-QM option that’s currently making waves in the industry is Asset-Based Lending. These loans are less stringent on tax return requirements and instead focus on – you guessed it – assets. Incorporating this solution into your mortgage business will not only allow you to reach more unique borrowers, but it will undoubtedly help you expand your mortgage business in 2024.
Ready to tap into Asset-Based Lending? Here’s what you need to know:
What is Asset-Based Lending?
Asset-based loans are an alternative way for borrowers to qualify for mortgage financing. Your clients will generally need to provide W2s, tax returns, and other income docs, but with an asset-based loan, they can use their assets as collateral.
By leveraging assets, brokers like you can offer more flexible financing solutions to non-bankable borrowers. And the best part? These loan programs can be tailored to their unique needs. From cash or cash equivalents to stocks and bonds, or even retirement funds, investors have a wider range of options when it comes to financing a property.
What types of borrowers benefit from this loan?
This type of solution is ideal for borrowers who may not have a steady flow of monthly income, but do have other forms of sizable assets. They can range from freelancers and small-business owners to high-net-worth or retired individuals.
One common example is a retiree who no longer earns a monthly income but has accumulated assets over the years. With asset-based lending, they can forgo submitting traditional income documentation and instead utilize their retirement account to qualify for a loan.
Closing with LendSure
Partnering with LendSure is easy. Through our process, we analyze three different types of assets: cash and cash equivalents, stocks and bonds, and retirement accounts. After examining these, we’re able to identify whether or not your client can financially afford their mortgage.
The formula is as follows: We give them credit for 100% of their cash and cash equivalents, 80% of their stocks and bonds, and 70% of their retirement accounts. While other lenders may have strict guidelines, our underwriting doubles the qualifying asset. That’s because we divide the total amount by 60 to calculate the monthly income the borrower is eligible for.
Here’s how it works:
| Asset Type | Amount | Percentage Used | Qualifying Amount |
| Cash Equivalents | $420,000 | 100% | $420,000 |
| Stocks & Bonds | $600,000 | 80% | $480,000 |
| Retirement Accounts | $700,000 | 70% | $630,000 |
| Total Qualifying Assets | $1,530,000 |
The total qualifying assets here add up to $1,530,000. After dividing that by 60 months, you get a $25,500 monthly income allowance.
If you’re working with non-bankable clients who have trouble providing tax returns or other qualifying income, asset-based lending is a smart alternative option. While you’re helping clients secure funding, this Non-QM product will also help you expand your mortgage business.
The LendSure Way
It’s simple. We make loans that make sense. We’re not in-the-box lenders. Of course, there are numbers ratios, and data to consider, but we know that behind every file, there’s an individual with a unique circumstance seeking a loan. We work hard to offer our common-sense take on lending to borrowers seeking funding for the home of their dreams, another addition to their investment property portfolio, or refinancing of a currently-owned property.
Are you ready to benefit from a commonsense approach to lending? Contact us today to learn more about non-QM loans and how partnering with LendSure Mortgage Corp. can help grow your bottom line.
