Most popular question. I am not sure where this post is heading but I wanted to add some basic info here and maybe let people use this as a guide (not bible) for qualifying for a mortgage. I have not written an outline and am "wingin" it here so wish me luck! ------------------------------------------------------------------------------------- O.K. Credit scores: MOST lenders will pull a TRI MERGE and of the 3 scores qualify you on the score in the MIDDLE. SOME lenders let you "pick a report" or "score the big one" but for the vanilla A paper stuff...meaning the best rates.....you go with the middle score. FOR THE MOST PART 500 is the lowest score you can go and still have a mortgage pulse. In a weird way, if you have a 0 credit score (which happens) you are better off then if you have a 500 credit score. The magical "automatic underwriting score" is 585 for MOST programs. This includes VA and FHA and most of your Alt-A and Fannie Mae "speacialty" programs. For Fannie Mae, 580 gets ya 97%ltv and 620 gets you 100%ltv. This is NOT a 620 score with a BK that was discharged 6 months ago or 7 outstanding collections. This is 620 and a pretty clean report for the last year or two. ---------------------------------------------------------------------------------- Bankruptcies NORMALLY, you will find lenders would like to see 24 months post BK for the CONFORMING stuff. SOME go 18 months on the CONFORMING STUFF and some require 48 months. There are several lenders that will go 12 months, 6 months, 3 months, and even ONE DAY out of BK DISCHARGE to finance you. These are not conforming programs/rates and it is important to note that lenders go off of the DISCHARGE date and not the filing. Chapter 7 is actually the easier of the two to get approved on. Chapter 13 or consumer credit counseling.....while the "right thing to do" as far as paying your debts....it is frowned upon by lenders and they have tighter restrictions on their programs for the 13 or ccc. The lenders want to see that you have ESTABLISHED credit SINCE the discharge so keep this in mind. ------------------------------------------------------------------------------------- Document types: Full Doc, where you provide income documentation such as W2s and pay stubs along with Bank statements to verify assets. Stated Income, where you do not provide income documentation, but only State your income and employment along with Bank statements to verify assets. No Ratio, where you do not even state your employment or income on the application, but only provide Bank statements. NINA (No Income No Asset), where not only do you not state your employment and income but also you don't state your asset on the application to qualify for the loan. There are also some NJNA (no job no asset) and other programs but these are the main ones. In some cases if your score is high enough (700 or better normally) you may be able to use STated income and assets yet get the same rates as full doc. On the alt a and subprime side you may be able to use bank statements as full doc as well..though these programs offer higher rates. ------------------------------------------------------------------------------------- 100% loans seems silly but it happens all of the time. You have a 100k home. Borrower wants a 100% loan. home is 100k and closing costs are 3k. So the loan is 103K correct? Not always. Most programs only allow you to borrow 100% of the PURCHASE PRICE which would be the 100k. You are required to come up with the closing costs OR have the seller pay them OR have the mortgage company raise your rate just enough to cover these costs. On the subject of 100%....if you found a steal on a home that is Appraised at 1 million bucks and you are payin 100K for it you have a 10%ltv (loan to value) loan correct? No. Lenders will almost always go off of PURCHASE price or APPRAISED value..whichever is LOWEST. Because what you paid for the home.....well a home is only worth what someone is willing to pay for it...make sense? ------------------------------------------------------------------------------------- Fees: There are so many ways to package a loan.FOR THE MOST PART: Lines 801,808,810, Administrative, and Application Fees on the Good Faith Estimate are "profit" fees for the lender/broker/banker. Anything in the 1100 or 1200 section of the GFE are thirdt party fees and it is illegal to charge MORE than what they actually cost. Section 900 are Pre Paids and go to the lender and not the broker. Section 100 is your Escrow account which will be used to pay your taxes and insurance and other miscellaneous items. These do NOT go into your loan officers wallet and is rather a "bank" for the lender to pull from to pay your taxes/ins/mortgageins/etc. On a side note, for the most part, if you want to pay your own taxes and insurance it will cost you .250% in discount or "points" . A good rule of thumb is if you have to pay mortgage insurance because of the LTV....you will not have the option of paying your own taxes and insurance. ------------------------------------------------------------------------------------- Anyone else can add to this post but I think it would help a bunch of the people who are trying to find some answers. Most of them are in these boards and sometimes they are hard to find if you don't have the time. If you just post your info (which is fine, don't get me wrong) and wait for someone to tell you if you are "mortgage material" then you aren't doing yourself a favor. Make sure you take the time to read the posts and educate yourself so you have a better understanding of the process when you call your Loan Officer in the morning. I tell everyone that YOU are the ones in control and not us mortgage professionals. Times are busy right now but YOU provide us with a standard of living. Demand respect and answers from your broker/banker/lender. On the flip side, provide all of the information that they need, be as upfront with them as you want them to be with you, and realize that if you end up not being able to get a loan then it isn't always a bad thing............the program/rates that you would have gotten into might have made you misserable and might not have been what you needed.
I had over 200 questions until I read that and other posts by you here lately. I have been reading anything I can get my hands on the last few months on this stuff, thinking ahead. From what I have read by you it seems like you care more than the other mortgage pros, mostly on other sites. Maybe some of them know or have access to a little more, but I really like what I am seeing from you. When can I ask the 100 questions I have left?
It's a niche......I am going against the grain by telling people things but it also makes great business sense. I have had mortgage guys ask me questions and learn from me..and I have had them say that I was goving away secrets and I was a jerk. I really enjoy helping people out though and I myself learn things every day. For the most part though it like this: you have a professor of Math at a university at a chalf board ready to do a difficult math problem...then you have a guy that has no degree and a computer.......which one do you think is smarter.......the professor of course..which one will get the answer first..the computer guy with the fancy program of course. Often it is knowing HOW to get the answer that is more important then having it. Thanks for your comments though....I was gonna wait to post some more but I guess I will post some stuff tonight and try to get those 1000 questions out of the way.
Some excellent information...thanks.. Many people here have wondered how/why their scores are different depending on where or who pulls them. What, in your opinion, is the most accurate place to check your scores? How close will they be to the ones the pros pull? There have been suggestions for PrivacyGuard, but that seems to be more of a monitoring tool... Thoughts? Thanks, DB
hello will, thanks for starting this thread. i saw a msn site that listed typical closing costs and said that you could ask the lender to waive the following items: document preparation lender processing fee warehouse fee is this true? are lenders ever willing to waive fees?
just with what I have seen, the privacy guard numbers are pretty darn close.........on some of the others i have seen maybe a 20 point differentce. And heres a nugget for ys, heres what the credit report that I pull looks like. http://www.facredco.com/HTML files/Products-RMCR_Sample.pdf
AS for waiving cost. The lender is generally going to make this up somewhere. Especially if these are really thrid parties fees that have to be paid. Interest rates have many comibination. Example: 6% 0pts+ 2000 closing cost 6.5% 0 cost 5.75 1 pt 5.5% 2 points so if you are asking them to eat some of the closing cost then you might get a rate back at 6.125 + 1500 in closing cost -- so did they waive it no, just reworked the #.
