Mortgage credit ratings

The following forms look complicated, they really aren't. They are basically just common sense. If someone has bad credit, you will need a bigger down payment from them and will charge a higher interest rate than if they have great credit. If the original mortgage holder did not negotiate this then you should ask for a bigger discount on the mortgage to compensate for your risk, or only buy enough of the payments to make yourself comfortable with the risk involved.

Determine the credit class of the borrower. (Not the mortgage seller). This is in the leftmost box. This is a combination of their payment habits shown on their credit report and their FICO score.

FICO is the credit score you will find for the borrower when you review their credit report. Click here to get a credit report on your borrower. Click here for a full explanation of the FICO credit score system.

Investment to Value is the percentage of the money you are paying for the mortgage to the value of the home. Cash down is the actual cash money that the borrower paid closing. So if the house is worth for $100,000 and the buyer put down $10,000 he has a $90,000 loan. If you buy this loan for $80,000 then it is an 80% Investment to Value loan. (ITV). The more cash down from the buyer. The safer the loan for you.

You can also buy just part of the mortgage.

As you can see, the greater the cash down, the lower is the ITV and the lower the interest rate you will probably be able to negotiate with the seller of the mortgage in each credit group.

Remember, if the mortgage seller is too eager to accept your offer, there may be something you don't know about. Maybe the home buyer (the borrower) is the local chief of police. Would you really want to be foreclosing on him if he doesn't pay? Or how about someone who is about to sue the home seller because some defects weren't disclosed to him?

Before you proceed please go through our tutorial on how to use a financial calculator and the Time Value of Money. Click here.

We also recommend you check out our selection of calculators.

The yields below are a guide only. 

Jump to Owner occupied

Jump to non Owner occupied

Jump to commercial/ land.

Follow through the course using the links below or jump around if you prefer.

Advertise your note broking business with the site ranked #1 of non-sponsored (paid) listings by Google and AltaVista..

Owner occupied real estate
Evaluating the credit risk of buying a mortgage secured by owner occupied real estate

Go directly to listings of mortgages and deeds of trusts for sale.

Free info on mortgage investments, private mortgages, hard money mortgages, discounted mortgages, seller financing.

Mortgages, owner financing, deeds of trusts, discounted mortgages, seller financed mortgage, hard money mortgage

Web sites design hosted for note brokers   note and cashflow buyers web site design hosting  Web site design hosting for mortgage brokers, mortgage broker web site design