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“Our existence is dedicated to developing the strategies and implementing the tactics that enable our clients to pay for their homes
as quickly as possible, rave to their friends about their credit scores, and to have fun doing so.
We strive to accomplish this in a manner that is profitable, will make our parents proud, protect our client’s privacy, and drive our
competitors insane!” |
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| Mortgage Risk Analysis 101/Fundamentals |
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Mortgage ReFinance
Management instructs each prospective client in the fundamental
basics of mortgage risk analysis. Mortgage ReFinance Management
understands that before a prospective client can achieve
one’s objective(s), one must first understand how
to qualify for that objective!
Mortgage ReFinance Management
requires that each prospective client understand “Why
they are, where they are!” Once
this is understood and acknowledged, corrective action
can, in most cases, be easily formulated and executed.
Basic psychology teaches that to correct an ailment,
one first must acknowledge the ailment.
Basic mortgage
underwriting is primarily driven by the following evaluations:
1.) Credit Scores, 2) the Debt-to-Income
Ratio, and 3.) the Loan-to-Value Ratio.
As Mortgage ReFinance
Management articulates, “The
3 Keys” to the Conforming Mortgage Market
are as follows: 1.) a 640 Credit Score
or higher and
2.) a Debt-to-Income Ratio of less than
41% and
3.) a Loan-to-Value of less than 90%.
Achieve these basic criteria and typically any client
will achieve
the best market rate structures, again, called the Conforming
Mortgage Market. To the contrary, if
a prospective client is deficient on these basic underwriting
criteria, one will not achieve the best
market rate structures!
Mortgage ReFinance Management
communicates to each prospective client, should one not
be able to qualify for the Conforming
Sector, instead of chasing the “Interest Rate Rainbow” which
can further damage your credit scores, do the logical
and necessary work in the short term, to put back in
order, “The 3 Keys” or qualifying criteria,
so that one can qualify for the Conforming Sector at
the earliest time point in the future.
Mortgage ReFinance
Management communicates and teaches that all mortgages
are priced in terms of interest rates
relative to the 15-year fixed-rate conforming mortgage.
An appropriate analogy in understanding “risk adjusted
pricing” in the mortgage market, is a comparison
to acquiring an automobile. Should one acquire an automobile
with heated seating, they will pay a higher price than
an automobile without that upgrade. Any “add-on” or “up-grade” will
result in higher pricing.
Such factors that can result
in higher pricing or interest rates specific to a single-family
residential mortgage
loan are lower credit scores, higher debt-to-income ratios,
higher loan-to-value ratios, longer amortization schedules,
the inability to empirically prove income, alternative
amortization structures such as “interest only” products,
or a combination of these factors.
Again, and it is certainly
worth repeating, before one can achieve the interest
rate structures one
wants or believes he or she deserves, one must first
qualify. If you do not qualify however, isn’t it
logical to begin doing the appropriate and necessary
work to qualify??
IMPORTANT NOTE: The average increase
on the mid-point of the credit scores for a Mortgage
ReFinance Management
client is 67 points higher six months after the project
commencement date!
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