Chapter 16: Choosing a Lender
1.
Discuss the differences between the prime and sub-prime
mortgage market.
A prime Borrower is typically an individual who has excellent credit, provable income and stable employment. This type of lending is often referred to as “, “A lending” or “Prime lending”, while those falling outside of these guidelines are served by the sub-prime mortgage market.
2.
Discuss the differences between prime and sub-prime
mortgages.
The rates and fees for prime mortgages are typically lower than those of sub-prime mortgages. Sub-prime mortgages are typically easier to qualify for.
3.
What factors can cause a Borrower to be considered sub-prime?
The typical sub-prime Borrower is an individual who may have a combination of the following characteristics:
· Current poor credit such as being behind in his or her payments on one or more credit cards, loans or other debts
· Less than two years at his or her current job
· Self-employed
· Has a previous bankruptcy
· Has previous poor credit with no re-established credit
· Requires high LTV financing.
4.
What type of Borrower will typically require a private
mortgage?
A client requiring a private mortgage will generally not qualify through a prime or sub-prime Lender. This client will normally have equity in his or her property and be able to obtain financing to a maximum of 85% LTV, depending on the area in which the property is located.
5.
What information is typically found in a Lender’s Product
Sheet?
The qualification requirements for each mortgage product.
6.
What information is typically found in a Lender’s Rate Sheet?
The rates for each mortgage product as well as the necessary credit score and loan to value
7.
What should a Mortgage Agent do if he or she is unsure if a
Lender will approve his or her client’s application?
Contact the Lender’s BDM for clarification.
8.
What factors must a Mortgage Agent consider when choosing a
Lender?
· Loan to Value: Which lender(s) offer the ltv that the client requires?
· Income Verification: What income verification is required? Can the client provide the appropriate document(s)?
· Property Type: Does the client’s property type meet the lender’s requirements? I.e., if the client has a rental property, does the lender have a rental product?
· Credit Score: What are the lender’s requirements? Does the lender offer a different ltv based on credit scores? If so, does the client qualify?
· Terms: which Lender offers the best terms for the client suchProduct: which Lender offers the right product for the client?
· Rates: which Lender offers the best rate based on the product chosen for the client?
· Speed: which Lender provides the quickest response to an application submission?
· Service: which Lender provides the best service to both Mortgage Agents and clients?
· Reputation: which Lender has the best overall reputation in the mortgage industry?
· Brokerage Preference: does the Mortgage Brokerage have a preference for or dictate which Lender should be used under certain circumstances?
· Finder’s Fees: if everything else is equal and two or more Lenders are appropriate for the client, which of those Lenders, if any, pays the highest commission?
· Loyalty Program: if everything else is equal and two or more Lenders are appropriate for the client, which of those Lenders, if any, offers a loyalty or points program?
9.
Which factors are the least important for a Mortgage Agent
when choosing a Lender?
· Finder’s Fees: if everything else is equal and two or more Lenders are appropriate for the client, which of those Lenders, if any, pays the highest commission?
· Loyalty Program: if everything else is equal and two or more Lenders are appropriate for the client, which of those Lenders, if any, offers a loyalty or points program?
10.
What impact does a credit score have on the ability of a
Borrower to access a Lender’s products?
