|
80/20 Split |
Interest
Rate | Low Credit |
Good News |
Investors
80/20 Split
100% financing is available for refinance or purchase with credit
scores dipping as low as 560. Many different programs exist, however
an 80/20 loan is most often recommended. 80% of the value is put in
a variety of first mortgage packages with the remaining 20% in a
fixed rate second mortgage or a line of credit. The major reason for
a cutoff at 80% is the ability to avoid mortgage insurance.
Interest Rate
The
interest rate is dictated by many factors, but none being more
important as your credit score. Three credit bureaus are generally
used (Experian, Equifax, and Trans Union) to arrive at the middle
score of the three. Typical categories in credit scores that help
dictate rates run greater then 720, 719-680, 679-660, and less then
660. As the credit score gets smaller qualified interest rates will
move up and there might be additional items needed to qualify. For
example there could be a need to show a certain amount of residual
income.
Other items that will affect the interest rate include:
-
the loan amount
-
is it cash out on a
refinance
-
is this the primary
residence, a second home or an investment property
-
is this a 3 or 4
unit building
-
is this a low rise
condo
-
does the income have
full documentation
-
is it an interest
only loan
Low Credit
As
the credit score gets down to 580 more rules come into play. How
many loans are you currently paying on and the funny thing here is
that you usually need at least three. Three is better then none. How
long have you had these loans and what are their maximum limits can
be important. Also important is the number of previous mortgage
lates or rental lates and if you were renting, is it from a private
party or a rental company. Also as the credit goes down, the amount
of cash reserves you have will go up.
Good News
At
America’s Mortgage Store we understand that little things can happen to an
individual. The good news is that 100% financing is still available
even if:
-
you just became
self-employed
-
you have been
discharged from a Chapter 7 bankruptcy 2 years ago
-
your income doesn’t
quite qualify you
-
you had a
foreclosure over 3 years ago
-
you are a first time
home buyer
-
your closing costs
are a gift from someone else
-
you filed for
Chapter 13 one year ago
Investors
100% financing is
available to investors usually with a credit score of 620 or
better. 100% financing is available to investors if they do not
qualify with enough income but have a credit score of 680 or better.It is helpful to put in your numbers into our spreadsheet
“The Power of Appreciation” to decide if 100% financing is right for
you. Use this spreadsheet to determine the possible appreciation and
profit from the ownership of your primary residence or your
investment property. Of course 100% financing allows you to leverage
your finances to the maximum. |
