Mortgage Lending "A through D"Written by Martin Lukac
What was once a small segment of residential lending is now becoming one of fastest growing areas in mortgage banking. Nearly every major institution is entering non-traditional lending market. These lenders are providing loans to borrowers that do not meet traditional credit criteria of secondary market investors such as Federal National Mortgage Association (FNMA) and Federal Home Loan Mortgage Corporation (FHLMC). Some issues preventing borrowers from meeting these criteria are bankruptcies, defaults, foreclosures and chronic late payments on credit obligations. This article will review salient points of non- traditional mortgage lending. Credit Grades. Non-traditional mortgage lending is categorized into credit grade categories based upon credit and capacity to repay mortgage loan. Those categories are A-, B, C and D. The more serious credit problems, further grade decreases. As grade on loans decreases, lenders generally assess higher rates and fees. Several factors contribute to credit grade on non-traditional lending such as past consumer credit history and mortgage payment history. Generally, lenders review credit history for past 12- 24 months. Income Ratios. Besides credit considerations, non-traditional lenders review capacity of borrowers to repay mortgage obligation. Lenders calculate a ratio (debt ratio) using total monthly debts and total monthly income. For example if a borrower has a monthly income of $6,000 and a total monthly debt obligation (including housing expenses and other consumer debt) of $2,000, debt ratio would be 33%. If a borrower has a low debt ratio, grade will be higher. Conversely, if a borrower has a high debt ratio, grade will be lower. Income Documentation. Non-traditional lenders use three approaches in documenting a borrower's income: Full documentation, easy doc/simple doc and no income.
| | Boat Refinancing Tips and AdviceWritten by Tom Schumacher
How great is it to save money on something that you already own? In today’s market that is a real possibility. Interest rates have remained at low levels for last couple of years and refinance industry has been booming. Many people have taken advantage of these rates to lower monthly housing payments, pay off credit card debt faster, and in general pay less for privilege of borrowing money. In some cases people have refinanced their homes several times to take advantage of interest rate drops. So you may ask what about refinancing a boat loan? Can I also save money by refinancing my boat?The answer is yes, although you need to do a little investigating. You may be able to save a substantial amount on your boat loan through refinancing at a lower rate. Sounds great, eh? Usually decision is as simple as it appears to be; refinance at a lower rate save money and pay your boat off faster. However there are some circumstances that probably rule out boat refinance option. If you intend to sell boat soon or your credit is substantially worse than it was when you bought boat, boat refinancing is probably not for you. However if you do not fall into those categories, boat refinancing can be a great way to save money every month. The most critical factor in considering boat refinancing is determining what your current situation is. For example, are you trying to pay off boat as soon as possible or reduce your monthly payments? Once you have determined what you are trying to accomplish finding right boat refinancing is simple. The Internet can be a great place to start shopping for a boat refinance loan. There are numerous companies offering boat refinancing programs with very low rates. However a word of warning be cautious of rates that seem too good to be true. Some boat finance companies will offer a very low rate but then charge exorbitant loan fees. In that scenario you may actually end up worse off than if you had not refinanced because now you have to pay off new boat loan fees in addition to loan amount. The savings on interest rate may not cover additional boat loan fees and you end up paying more in long run. Professional boat financing companies will charge a small fee for refinancing service on new loan but rate reduction should more than offset fee and leave you with smaller payments and a faster payoff schedule.
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