|
Chart: Loan markups
By Michael
D. Larson • Bankrate.com
Not every mortgage is the same.
If you want anything more than a plain-vanilla loan, expect to pay
for the privilege. Lender "markups" come in all shapes
and sizes. But they usually apply when borrowers have credit problems,
they want to buy condominiums, second homes and townhomes in multiple-unit
buildings, they don't want to share a lot of financial data with
their brokers or lenders or they don't have a lot of money for down
payments.
Here are some examples of markups (or "pricing
adjustments" in industry jargon) from IndyMac Bank of Irvine,
Calif. The mortgage lender provided a list of markups that would
apply to a jumbo loan (one for more than $275,000) in early September,
2001
Keep in mind, borrowers have the option of paying
the markup by accepting a higher amount of points or a higher interest
rate. Typically, an increase of three-eighths of a percentage point
(0.375%) to five-eighths of a percentage point (0.625%) to the "points"
of the loan equates to a one-eighth of a percentage point (0.125%)
increase in the loan's interest rate.
|
Sample markups
|
|
Description
|
Price
(in points)
|
| Reduced documentation (75.01-80
Loan-to-value ratio) |
0.750
|
| Reduced documentation (80.01-90
LTV) |
1.000
|
| Reduced documentation (90.01-95
LTV) |
1.500
|
| Full documentation (more than
90% LTV) |
0.500
|
| Cash out refinance |
0.250
|
| Loan more than $650,000 and
less than $1 million |
0.375
|
| Loan more than $1 million and
less than $1.5 million |
1.750
|
| LTV 80.1 to 90% |
0.375
|
| Two-unit properties |
0.375
|
| Three- to four-unit properties |
1.000
|
| High rise condo |
0.750
|
| Non-owner occupied |
1.500
|
| 2nd home |
0.750
|
| Credit score higher than 740 |
-0.125
|
|
