Chapter 16 - Choosing a Lender Flashcards
What factors can cause a Borrower to be considered sub-prime? (6)
1) Poor credit from missed payments
2) Less than two years at his or her current job
3) Self-employed
4) Has a previous bankruptcy
5) Has previous poor credit with no re-established credit
6) Requires high LTV financing
What information is typically found in a Lender’s Product Sheet?
The qualifications for each mortgage product
What information is typically found in a Lender’s Rate Sheet? (3)
Rates, credit score, LTV
What impact does a credit score have on the ability of a Borrower to access a Lender’s products?
Most Lenders’ products have minimum credit score requirements and that must be met by the Borrower.
What does a “self-insured” lender mean?
Is a lender that does not offer default insured mortgages. So they charge a lender’s fee - paid by the borrower on closing & from their mortgage proceeds
Re: self-insured lenders - Who pays the lender’s fee? And when is it charged?
The borrower pays the lender’s fee on closing from their mortgage proceeds
If a borrower does not qualify for a prime or sub-prime lender, what is the last option available?
Private mortgage lender
What type of product does a private lender normally offer?
An interest only mortgage
Monthly payments
1 year term
What does “Stated Income” mean on a lender’s product sheet?
Means the borrower can provide a letter stating their income without proving it
What does “Full Doc” mean on a lender’s product sheet?
Means the borrower can provide documentation to verify their income
What is the difference between a product sheet and rate sheet?
Product sheet: shows the terms and conditions that must be met for approval and the features of the mortgage (i.e., max LTV, amortization, etc)
Rate Sheet: Shows the interest rate
What does “SFD” mean on a rate sheet?
SFD = Single Family Dwelling
What does “BFS” mean on a rate sheet?
BFS = Business for self - i.e., self employed
