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Established Contributor
myhearts07
Posts: 858
Registered: ‎06-26-2007

Is this correct about scoring?

Loans are basically broken up into two categories, prime and sub-prime.

A prime borrower has to meet some basic criteria.

- A middle fico of at least 620

- No Mortgage lates for the last 24 months (if a refinance or if you owned property prior to a pruchase)

- NO Bankruptcy or credit counseling for 48 months.

- No charge offs or collections on their credit report.

- 3 months seasoned PITI reserves in any sort of savings account, checking or liquid asset. (PITI stands for Principle, Interest, taxes and Insurance. It's your overall monthly mortgage obligation. So whatever your payment will be, you will need 3 months worth in a seasoned account most banks at least 2 months of seasoning.)

- A Debt to Income ratio of 45%

- Some banks may require it to be an Owner Occupied property only but not all.

If you don't meet all the requirements you are a sub-prime borrower and fall into a completely different category.

Sub-prime borrowers will face higher rates, some may not be that much higher but that will depend on 3 aspects.

1- credit 2- Income 3- equity

Your credit will determine the rate, as well as your LTV (Loan To Value, in a refinance it is current mortgage balance divided by current market value. In a purchase it always goes off the purchase price no matter what the appraised value is, so a home sold for 100,000 and you put down 10%, the LTV is 90%)

Moderator Emeritus
Tuscani
Posts: 6,182
Registered: ‎03-29-2007

Re: Is this correct about scoring?

I wouldn't agree that everything you posted is 100% accurate across the board. Remember, each bank is different and has their own standards on what is and isn't considered prime\sub-prime.
New Contributor
FICOnater2007
Posts: 56
Registered: ‎07-05-2007

Re: Is this correct about scoring?

MyHearts07,
 
Thanks for the basic info...it answers some questions I had myself.  Tuscani, what would you add to (or change) on this list, if anything?
 
Best regards to all,

FICOnater2007
Established Contributor
myhearts07
Posts: 858
Registered: ‎06-26-2007

Re: Is this correct about scoring?

Tusc,
 
I copied and pasted this from another site and myself and Lost2007 were wondering what scores you would need to be considered in the prime category for better rates.  So I did a search on google for prime fico scores and this is what came up.  I didn't make up the list, just so ya know.  I wasn't sure if the info was correct or not, which is why I posted.
Regular Contributor
Joe77
Posts: 218
Registered: ‎07-29-2007

Re: Is this correct about scoring?



myhearts07 wrote:

Loans are basically broken up into two categories, prime and sub-prime.

A prime borrower has to meet some basic criteria.

- A middle fico of at least 620

- No Mortgage lates for the last 24 months (if a refinance or if you owned property prior to a pruchase)

- NO Bankruptcy or credit counseling for 48 months.

- No charge offs or collections on their credit report.

- 3 months seasoned PITI reserves in any sort of savings account, checking or liquid asset. (PITI stands for Principle, Interest, taxes and Insurance. It's your overall monthly mortgage obligation. So whatever your payment will be, you will need 3 months worth in a seasoned account most banks at least 2 months of seasoning.)

- A Debt to Income ratio of 45%

- Some banks may require it to be an Owner Occupied property only but not all.

If you don't meet all the requirements you are a sub-prime borrower and fall into a completely different category.

Sub-prime borrowers will face higher rates, some may not be that much higher but that will depend on 3 aspects.

1- credit 2- Income 3- equity

Your credit will determine the rate, as well as your LTV (Loan To Value, in a refinance it is current mortgage balance divided by current market value. In a purchase it always goes off the purchase price no matter what the appraised value is, so a home sold for 100,000 and you put down 10%, the LTV is 90%)




Very generalized, but overall pretty accurate.  Although, you can often get prime loans 24 months after bankrupcty discharge (13 or 7) as long as your re-established credit is perfect, Debt-to-income is low, and there are some assets to work with.  At that point it's often at the mercy of automated underwriting systems.
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