Cash Out. There are loan to value restrictions and maximum cash out restrictions for loans. Cash out loans can cost .25% to .50% points of a loan. Most first mortgages can only take cash out ot 90% of the value of the home. Combination loans of first and seconds can take out 80% to 90% on the first loan and combine a 2nd loan up to 100% of the value of the home depending on the credit rating. By having the first mortgage at 80% of the value of the home, mortgage insurance (PMI) is avoided.

Credit Scores for Prime Bank loans should be between 640 and up. Credit Scores of 680 or greater normally can be imputed through an automatic on line approval system that gives the loan broker an answer in 3-4 minutes. Credit score ranges can limit the percentage of value that a client can obtain on a loan. Sub Prime lenders can make loans on credit scores as low as 500. Note that the lower the credit score the lowere the loan to value (LTV) of the value of a home and the higher the interest rate and points.

Full documentation means providing: one months of pay stubs, 2 months of bank statements, 2-3 months of mortgage payments in checking or savings as reserves in the bank over the last 2-3 months, W-2’s for the last two years or if business for self, the last two years of complete 1040’s.

No Income or No Asset means that no income or bank balances are declared on the application at all. These loans usually are of lower loan to value and can cost for .50% to .75% more interest rate and .25% to .75% more points on of a loan.

Non-Occupant Co-Borrowers usually do not help the client that will occupy the house. There are restrictions of qualification placed on the primary borrower such that a co-borrower with good credit will not help the situation.

Payment Ratios. All loans establish a percentage value that the house payment cannot surpass of the total monthly gross income. This is called the “housing ratio”. Housing ratio’s are between 30% to 40% of gross monthly income. All loans establish a percentage value of house payment and total debt that cannot surpass of total monthly gross income. This is called “Debt to Income Ratio” or DTI. The DTI is usually 40% to 50% of monthly gross income.

Second Loans. With the extended use of second loans all loan programs have restrictions for the maximum percentage of the first mortgage and the maximum percentage of the second loan combined i.e. LTV/CLTV.

Stated Income documentation means that income is stated on an application and no proof is provided by client or broker. A stated income product usually can cost  .25% to .50% points of a loan. Minimum Credit Score requirements must be met and can change the cost of the loan.

Stated Asset documentation means that bank checking and savings balances are declared on the application and no proof is required by bank or broker. Minimum Credit Score requirements must be met and can change the cost of the loan.