Everyone should keep in mind that it's not just your score that gets you a low rate but it does have a big part in the rate. I have seen people with 620 fico get better rates than 720 fico. Many of you won't believe this but I have a borrower now with a 566 fico that I gave a 8.625 and because she has 100K in her 401K, great payment history, and very low loan to value and she just got an uplift to go prime at a 5.875 30year fixed rate.
I don't want to mislead anyone!!! She is paying 4points or $5,280 on $132,000 loan amount. I am paying off all of her debt and saving her over all $900. OK... 4 points is a lot right?
A loan amount of $132,000 with the rate at 5.875% for 30 years = 780.83 30 YEARS
Now take the $780.80 + $900 $500 = 1280.80 put this into the loan... Now she will pay it off in 11.98 years. If she did 1680.80 she would pay it off 8.28 years.
A GOOD TIP... ON A PRINCIPLE AND INTEREST PAYMENT. TAKE YOU PAYMENT AND TIMES IT BY 1.25 AND APPLY THE EXTRA TO YOUR MORTGAGE AND YOU WILL CUT THE LOAN IN HALF.
Try this on a mortgage calculator if you don’t have one... Google it.
Sorry!!! Got of track.
Fico - 620 plus is where you want to be but 700 fico you can get more done.
DR (debt to income) - To be prime you need to be at 38% or less but you can get away with 45%
Assets - 3 to 6 months in the min... If you have a lot of assets you can get a prime loan at 52% DR and I say 52% because that is the highest I have ever done.
Doc type - Full doc is always the best way to get a lower rate. Any time risk is involved the rate will go up. See examples below.
Reduced - Stated income, Employment and Assets verified
No Ratio - Employment and Assets verified, Income NOT stated or verified
SISA - Stated income, Stated assets but Employment verified
NINA - Income, Assets, Employmeny NOT verified
Purchase or Refi? First time home buyers seem to have the best rate. Then goes Purchase... Then Refi.
Example... Let’s say you have a 750 - 800 Fico and you have no assets because it’s all in your business. So we can't prove assets. As for income... You don’t pay yourself and we are going to prove your income with tax returns. Let’s see... Most tax returns I see borrowers write everything off to show a loss and the net is what we need. If we use the tax returns the DR will be too high. This loan would be a SISA (Stated income/Stated assets).
A borrower with a 620 Fico that could go full doc, show assets, no late of any kind, and same job/field for min of two years would get a better rate.
DionLaw is 100% correct!!!!!! Do what is right for you!!!
You can give the same loan to ten loan officers and get ten diffrent quotes! Even if its from the same company.You should be able to give the LO your information and they should ask all the right question, go over every item of your credit report with you, and most of all do what is best for you and not the LO's pocket. The way I look at it is if I take care of my borrower it may lead to a referral.
midnight, this is very encouraging news--I was holding off even looking for a house until my score was over 700. My scores are at best in the mid 600's at this point...so you're saying that's enough to start consider looking if I also have a decent chunk of Benjamin's saved up?