Mortgage Rates After Bankruptcy On Government And Conventional Loans
This ARTICLE On Mortgage Rates After Bankruptcy On Government And Conventional Loans Was PUBLISHED On October 31st, 2019
There are loan level pricing adjustments (LLPA) charged by mortgage companies for layers of risk.
- For example, there are tiers of pricing adjustments on credit scores
- The lower the credit scores, the higher the pricing adjustments
- Many people think Mortgage Rates will be extremely high
- There are many instances where consumers with a recent bankruptcy can get credit scores north of 700 plus in less than a year
- Gustan Cho Associates helps our clients with boosting their credit scores
- The higher the credit scores, the lower the mortgage rates
- Many borrowers are surprised that Mortgage Rates After Bankruptcy On Government And Conventional Loans are not affected by loan level pricing adjustments
- This means that a prior bankruptcy and/or foreclosure does not have any impact on locking mortgage rates
In this article, we will cover Mortgage Rates After Bankruptcy On Government And Conventional Loans.
What Are Loan Level Pricing Adjustments
Loan Level Pricing Adjustments are commonly referred to as LLPAs.
- LLPAs are pricing adjustments lenders charge borrowers with layered risks
- For example, borrowers with lower credit scores are considered riskier borrowers
- Therefore, lower credit score borrowers with get a pricing hit depending on how low the credit scores are
- To get par rates, borrowers will need a 740 credit score, 20% down payment, lower debt to income ratios, and other positive factors
- Condominiums are considered riskier investments than single-family homes
- Multi-family properties are considered riskier investments than single-family homes so LLPAs will apply
Lenders can have pricing adjustments for many factors. However, there are no pricing adjustments on Mortgage Rates After Bankruptcy, foreclosure, deed in lieu of foreclosure, short sale.
Typical Loan Level Pricing Adjustments On Mortgage Rates
Whenever consumers hear mortgage rates, the rates quoted are par rates for borrowers with 740 plus credit, 20% down payment, low DTI, and other positive factors. The par rate is the starting point on mortgage rates. Depending on the profile of the borrower and the property, the LLPAs apply.
Here are typical Loan Level Pricing Adjustments charged by mortgage companies:
- Credit Scores
- Loan to value
- Type of property (Condo, Multi-Family, Manufactured Home versus SFH)
- Loan amount (Under $200,000 loan balances have LLPAs)
- State the property is located
- Debt to income ratios
- Manual versus automated underwriting system approval
- Escrow versus non-escrow (LLPAs apply on non-escrowed)
When shopping for mortgage rates, lenders need to take LLPAs into account prior to quoting rates and terms.
Factors That Do Not Affect Mortgage Rates
Prior derogatory credit tradelines do not factor into mortgage rates.
- Derogatory tradelines are factored in borrower’s credit scores but not mortgage rates.
- For example, mortgage rates after bankruptcy, foreclosure, deed in lieu of foreclosure, a short sale will be the same as borrowers without these prior events
- Late payments, outstanding collections, repossessions, prior loan modifications, charged-off accounts do not affect mortgage rates
Applying For A Mortgage With A Direct Lender With No Lender Overlays
Many borrowers think that prior derogatory credit tradelines will affect mortgage rates. This is not true. For more information on this article and/or other mortgage-related topics, please contact us at Gustan Cho Associates at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org. Gustan Cho Associates has no lender overlays on government and conventional loans. The Team at Gustan Cho Associates Mortgage Group is available 7 days a week, evenings, weekends, and holidays.