Chapter 16: Choosing A Lender

Question 1

Discuss the differences between prime and sub-prime mortgage market

Answer 1

A prime Borrower is typically an individual with excellent credit, provable income and stable employment.

This type of lending is often referred to as “A lending / prime lending”, while those falling outside of these guidelines are served by the sub-prime mortgage market.

Question 2

Discuss the differences between prime and sub-prime mortgages.

Answer 2

The rates and fees for prime mortgages are typically lower than those of sub-prime mortgages. Sub-prime mortgages are typically easier to qualify for.

Question 3

What factors can cause a Borrower to be considered sub-prime?

Answer 3

May have a combination of the following characteristics:

• Current poor credit
• Less than two years at his or her job
• Self-employed
• Has a previous bankruptcy
• Has previous poor credit with no re-established credit.
• Requires high LTV Financing

Question 4

What type of Borrower will typically require a private mortgage?

Answer 4

A client requiring a private mortgage will generally not qualify through a prime or sub-prime Lender.

This client will normally have equity in her or her property and be able to obtain financing to a maximum of 85% LTV, depending on the area in which the property is located.

Question 5

What information is typically found in a Lender’s Product Sheet?

Answer 5

The qualification requirements for each mortgage product.

Question 6

What information is typically found in a Lender’s Rate Sheet?

Answer 6

The rates for each mortgage product as well as the necessary credit score and LTV.

Question 7

What should a Mortgage Agent do if he or she is unsure if a Lender will approve his or her client’s application?

Answer 7

Contact the Lender’s BDM for clarification.

Question 8

What factors must a Mortgage Agent consider when choosing a Lender?

Answer 8

• LTV
• Income Verification
• Property Type
• Credit Score
• Terms
• Rates
• Speed
• Service
• Reputation
• Brokerage Preference
• Finders fee
• Loyalty program

Question 9

What factors are the least important for a Mortgage Agent when choosing a Lender?

Answer 9

• Finders fee

- Loyalty Program

Question 10

What impact does a credit score have on the ability of Borrower to access a Lender’s product?

Answer 10

Most lender’s products have minimum credit score requirements that must be met by the Borrower.