Mortgage lending is based on 2 things
Credit, Layed Risk (LLPA) aka Loan Level Pricing Adjustments
4 C's
Credit, Capacity, Collateral, Capital
What kinds of questions regarding credit are we looking for?
FICO score, payment history(late payments), Derogatory(Bankruptcies, foreclosures, judgements, short-sales), amount utilized/possess, debts, borrowers willingness to pay
CRA
3 major , Experian, TransUnion, Equifax = Consumer Reporting Agencies
Capacity
Refers to a borrowers ability to repay debt
Sources of Income
Passive, Self employed, child support, Salary/Hourly, Retirement Income
DTI
Debt to income ratio
HER
Front End Housing Expense Ratio
Calculating Front End Housing Expense
Monthly Housing Expense / gross monthly income
Back End Ratio or Total Obligation Ratio (TOR)
Monthly Housing Expense + non-cancelable debt / gross monthly income
Non cancelable debt
Car payment, credit cards, child support, student loans
Conventional Fannie Mae / Freddie Mac Single Family Residence (SFR) normal limit
484,350
Conventional Fannie Mae /Freddie Mac Single Family Residence (SFR) High Balance limit
726,525
What are the types of liens
Home Equity Loan (HEL) - installment closed end Home Equity Line of Credit (HELOC) - revolving open end Purchase Money 2nd aka (Piggy Back) - taken out at the time of purchase
2nd Mortgages
Conventional, Non-conforming
Types of mortgage transactions
Purchase, Rate and Term, Cash out Refinance, Streamline Equity