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Hi sofaking,

My point was that back in the horse-buggy days of mortgage qualifying, you were qualified on debt-to-income ratios. Not FICO scores. Rarely would you (and me)get a mortgage approval (without other circumstances such as a large down payment etc.) if your front end debt exceeded 33% of gross income and 38% of total debt load, including housing payment. Today, you can get a loan if you are breathing--including FICO scores are under 600, although at rates higher (much) than traditional 30yr fixed programs.

I don't think I'd do to well as a loan officer due to the fact that I just couldn't sleep at night knowing that I made major bank off of someone who was foolish enough to refinance again and again. I other words, I ethically couldn't be a loan officer on many of the transactions my wife and I close.

Your scenario:

In your situation, make certain that you are credited with any rebate the loan officer is receiving as a YSP (yield spread premium). Just a minor 1/8th or 1/2 point YSP to the broker from the lender reaps them huge profit, in many cases much more than the 1% loan origination fee itself. Look for any YSP premium on your settlement statement stipulated as a credit to your broker from the lender for selling you a higher interest rate than you could receive otherwise. It is usually placed in your settlement fee column along with loan origination fees, recording fees etc....EXCEPT it is not placed into the fee column!! But it is there, look for it.

I can't tell you how many times loan officers ask us how we handle the YSP issue (in other words, "what do we say" if a client asks about it on the settlement statement.) It makes loan officers sweat. And it should if they are truly working for the client's best financial interest.

Good luck to you.

Tim
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