Benefit

Lenders who refinance for borrowers with 500 FICO credit scores (see FICO ratings and classifications) or less separate borrowers by how late they are on their mortgage. These classifications include:

• late once by 30 days
• late more than once by 30 days
• late once by 60 days
• late more than once by 60 days
• late by 90 days
• late by 120 days

These types of loans are available for both primary residences as well rental properties.

These loans are also for full documentation or stated documentation loans.

Restrictions

These types of loans are usually for borrowers with lots of equity in their property.

Lenders often limit loans to 60%-75% of the value of a property. Loans in the higher range here are borrowers with relatively better loan profiles, such as fewer mortgage lates.

The equity in the property is enough to protect the lender in the event of a borrower default.

Interest Rates

Mortgage rates for this type of loan are usually much higher than for other loans. Rates nearly double that of other loans are not unheard of.

These loans can also come with or without a prepayment penalty.

These types of loans are available for:

• primary residence
• condominiums
• 3-4 unit properties
• rural properties

Many of these loans have no limit on their cash out up to the loan to value ratios. For example, you may be able to cash out an unlimited amount up to 70% of the value of the property.

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