107% loans

Guest

I am interested in finding a reputable lender that offers this type of loan. I understand that this loan is designed for the individual that has poor credit and needs to pay past debt prior to purchasing the home. Can you give me more information regarding this type of loan and possible lenders that offer this loan?

Caron · Posted: Wed Aug 24, 2005 10:59 pm Post subject: RE:

Hi kellee

Welcome to MortgageFit forum.

A 107 % loan is a conventional fixed rate mortgage which requires fixed monthly payments towards its repayment, as the interest rate is fixed throughout the entire loan term. The loan amount here is equal to 107% of the sales price of the property. In this case, 3% of the loan amount is used for paying closing costs and the rest 4% is utilized to clear consumer debts.

Here are some important features of a 107% loan program.

Qualifying ratio:
107% mortgages require that a borrower's total debt amount including monthly mortgage payments and that towards other loans like credit card debts, student loans etc should not exceed 45% of the gross monthly income.
Income and employment status:
There are no restrictions as far as the income requirements are concerned. Lenders generally review a 2 year work history. There is no time limitation in a particular job.
Down payment: A 107% home loan does not require a down payment. The extra loan proceeds are used towards paying the closing costs, prepaid items and consumer debts. In case, a borrower chooses to use the excess loan proceeds towards consumer credit repayment, then the revolving debt can be paid off at closing so that the borrower can qualify for the home loan.
Closing costs: The closing costs and prepaid interest are often paid by the seller as long as these are limited to a certain amount. The contribution for primary and second homes from the seller towards closing costs includes 3% of the sales price.

Hope this information will help you form an idea on 107% mortgages.

Regarding the lenders who offer this loan, please let us know the name of the state where you are looking for this kind of mortgage. As soon as you provide us with the name, we will forward your request to our customer care department and they will post the details of such lenders.

Hope that we have able to guide you. Please feel free to send further queries. Also, sign up with us at http://www.mortgagefit.com/signup/ to get free consultation on related issues.

Regards,
Caron.

Jessica · Posted: Wed Aug 24, 2005 11:14 pm Post subject: Re:

Hi kelle

Let me guide you with some more features of 107% mortgage loan.

Credit score:
Organizations like Freddie Mac and Fannie Mae require a credit score of about 620 for primary and second homes.
Co-signor:
107% loans do not require co-signors or non-occupant co-borrowers.
Gift funds:
107% home loans do not accept gift funds from relatives, friends or employers. Therefore, the down payment and closing costs are not paid through such gift assistances.
Mortgage Insurance:
Such loan programs do not require mortgage insurance which is usually included in other loan programs to prevent a lender from financial loss in case of any default by a borrower.
Cash Reserves:
Generally, borrowers require a minimum of two months cash reserves in the bank for payments towards the escrow account. But those who have credit scores less than 680 may require six months cash reserves.
Prepayment penalty:
These loans do not require any penalty for repayment of the loan before the end of the loan period.
Eligible properties:
Single family attached and detached homes, 2 to 4 unit properties, planned urban developments and condominiums approved by Freddie Mac and Fannie Mae are eligible to secure 107% mortgage loan. Investment properties however don't qualify for such loan programs.
Assumability:
107% home loans are not assumable.

Hope these will help you further.

Regards,
Jessica.

Guest

Its a good information, I got the answer for my query.

Thanks

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