Posted on: 10th Dec, 2006 05:54 pm
I live in Massachusetts. Looking to purchase a house. One lender suggested a No Ratio 80/20 5/1 ARM interest only loan. My mid FICO right now is 607, but working to get it higher.
Income is above 100K / yr. Is this a good option or are there better out there?
Income is above 100K / yr. Is this a good option or are there better out there?
Hi Guest,
A no-ratio home loan is an option which requires a borrower disclose his income details so that the lender can verify it. But the lender cannot use such details to determine if the borrower should qualify for the loan. The conventional ratios – debt-to-income ratio and housing ratio are not applied. However, the borrower is expected to have a good credit score and sufficient assets that will make the lender not consider the borrower's income.
Considering your situation, I think you should wait for some more time and increase your FICO score so that some more options will also be available. This is because at your credit score, lenders generally ask for higher interest rates and as it is you are going for an ARM, so rates can fluctuate and get higher any time.
Thanks,
Sara
A no-ratio home loan is an option which requires a borrower disclose his income details so that the lender can verify it. But the lender cannot use such details to determine if the borrower should qualify for the loan. The conventional ratios – debt-to-income ratio and housing ratio are not applied. However, the borrower is expected to have a good credit score and sufficient assets that will make the lender not consider the borrower's income.
Considering your situation, I think you should wait for some more time and increase your FICO score so that some more options will also be available. This is because at your credit score, lenders generally ask for higher interest rates and as it is you are going for an ARM, so rates can fluctuate and get higher any time.
Thanks,
Sara
Hi Mree,
Considering the downward trend of 5/1 year ARMs, I think you can go for it. But before taking any such decision, gather all loan related information from the lender.
Lenders set a low initial rate on these loans so that borrowers can qualify for it. But then after a year, the interest rate will be adjusted and it can go upward. So, you should enquire about the maximum rate your lender will never go beyond. Also, make proper calculations and prepare an estimate of the payments, so that you can keep aside sufficient cash in case your monthly payments shoot up.
If you can give us some more details about your loan program, then I can give you suggestions on other aspects of the loan.
Looking forward to your reply
God bless you.
Samantha
Considering the downward trend of 5/1 year ARMs, I think you can go for it. But before taking any such decision, gather all loan related information from the lender.
Lenders set a low initial rate on these loans so that borrowers can qualify for it. But then after a year, the interest rate will be adjusted and it can go upward. So, you should enquire about the maximum rate your lender will never go beyond. Also, make proper calculations and prepare an estimate of the payments, so that you can keep aside sufficient cash in case your monthly payments shoot up.
If you can give us some more details about your loan program, then I can give you suggestions on other aspects of the loan.
Looking forward to your reply
God bless you.
Samantha
Thank you very much for your input
Who has the best refinancing package for someone with great credit, excellent income (varifiable) and plenty of equity. Not looking for cash out, just a simple refi to lower rate and term if possible. You see adds all the time for sub prime lenders but none for people with good credit and income. I live in the Charlotte, NC area if it matters!
hi phil,
as you have great credit score and also excellent income, then getting refinance will not be a problem for you.
you will have to contact few lenders providing service in your area and compare the rates they are offering. i am sure with your profile you will be able to get the most competitive and lower rates available currently.
william madison
as you have great credit score and also excellent income, then getting refinance will not be a problem for you.
you will have to contact few lenders providing service in your area and compare the rates they are offering. i am sure with your profile you will be able to get the most competitive and lower rates available currently.
william madison
The 5/1 ARM IO is a great program --the No Ratio approach at 607 FICO is near impossible, and unnecessary -- go with STATED. You have good income; unless there is something odd in your employment history, ask about other income documentation. In descending order (from high to low,) FULL, LIMITED, STATED, NO RATION, NO DOC all have different interest rates due to the ability of the borrower to present convincing documentation.
Type of Documentation
FULL
Fully verified by lender -- Income
Fully verified by lender -- Assets
Fully verified by lender -- Employment
ALTERNATIVE
Lender accepts W2s, bank statements, verbal verification of employment
STATED INCOME
Stated -- Income
Fully verified -- Assets [STATED/STATED -- Assets not verified]
Verbal verification -- Employment
NO RATIO
Not reported -- Income
Fully verified -- Assets
Verbal verification -- Employment
STATED INCOME/STATED ASSETS
Stated -- Income
Stated -- Assets
Verbal verification -- Employment
NO INCOME/NO ASSETS (NINA)
Not reported -- Income
Not reported -- Assets
Verbal verification -- Employment
NO DOCS
Not reported -- Income
Not reported -- Assets
Not reported -- Employment
Type of Documentation
FULL
Fully verified by lender -- Income
Fully verified by lender -- Assets
Fully verified by lender -- Employment
ALTERNATIVE
Lender accepts W2s, bank statements, verbal verification of employment
STATED INCOME
Stated -- Income
Fully verified -- Assets [STATED/STATED -- Assets not verified]
Verbal verification -- Employment
NO RATIO
Not reported -- Income
Fully verified -- Assets
Verbal verification -- Employment
STATED INCOME/STATED ASSETS
Stated -- Income
Stated -- Assets
Verbal verification -- Employment
NO INCOME/NO ASSETS (NINA)
Not reported -- Income
Not reported -- Assets
Verbal verification -- Employment
NO DOCS
Not reported -- Income
Not reported -- Assets
Not reported -- Employment