No Ratio Loans

[goodstuff]

Does anyone have good info on No Ratio Loans. From what I hear you need a 680, is it basically just score driven? If I have a 680 with open collections is that O.K.? Also I understand it's like a 80/20 Loan so you don't have to pay PMI? Is it possible to get 100% financing with this kind of loan? Will the interest rates still be pretty competitve?

Thanks for any insight!

[CK]

Does anyone have good info on No Ratio Loans. From what I hear you need a 680, is it basically just score driven? If I have a 680 with open collections is that O.K.? Also I understand it's like a 80/20 Loan so you don't have to pay PMI? Is it possible to get 100% financing with this kind of loan? Will the interest rates still be pretty competitve?

Thanks for any insight!

A no ratio loan is a score driven product. There are lenders that will do the loan with open collections even at 100% however the rates on any no ratio program at 100% are very high even on a 80/20. Think about the risk factors........open collections that haven't been paid, no income...these items will increase the rate......and you have to be able to verify assets and in most cases it's 6 months PITI.

[firstsource]

On risk & rates.
This is simplistic, but the lower the risk, the lower the rate.
Perfect loan for a lender is:
640+ Mid score that a mortgage company gets.
80% or less LTV (value of the home that is being borrowed)
Assets for 2 months PITI (the whole house payment-Principal/Interest/Taxes/Insurance)
2 year job history.
No collections/judgements/bk's.

The less information provided or the worse the situation, the higher the rate.

Charles
When deciding what kind of program for a client, a LO will try to fit them into a program that matches their needs. For instance, if you just need a stated income, but have assets, that is going to have lower rates that a true no doc loan, that just requires that the client can hold a pen.

[goodstuff]

I guess I must have misunderstood the No Ratio loan, I thought that they still verify employment and income they just don't look at ratios (your debts) is there a loan like this that exists?

[firstsource]

Sorry, these reply's did not answer your main question of how low the scores can be.

620 is the minimum.

Charles

[liverichly]

I guess I must have misunderstood the No Ratio loan, I thought that they still verify employment and income they just don't look at ratios (your debts) is there a loan like this that exists?

They either verify your income & employment but no not have required qualifying debt ratios OR your employment is verified but your income isn't listed on the application (thus not verified). In either case assets (reserves) are almost always verified.