Posts tagged with "mortgage"

Non-Banks Making More Mortgages

Back in 2007, banks made 3 out of every 4 home mortgage.  As the financial crisis deepened, they became just about the only source for mortgage loans— that despite the fact their lending practices were at the root of the cause of the financial crisis.  Go figure?!

However, now the wor has turned.  Banks now account for just 1 out of every 2 mortgages, and we’re starting to see some of the big banks exit the mortgage biz altogether.  That’s fine with me.  Good riddance!  Historically, big banks have been the stingiest and least friendly lenders to work with.

Today, we’re seeing more and more credit unions and especially mortgage companies making loans so that people can buy hKouses.  I think that’s great news for consumers.  Mortgage companies are more consumer-oriented, more creative, willing to figure out ways to make more loans, and just downright friendlier and easier to work with.  I mean, what’s not to like?  Hopefully this trend continues.

If you have questions about mortgage financing, please be sure to ask.  I spent 17 years in those trenches and still have a strong network to call upon.  Talk soon, Bob

 

 

 

Just HOW good does one’s credit need to be?

I had an email from a prospective buyer yesterday saying she was going to hold off on buying until she got her credit in order.  Now, that can certainly be a good strategy.  But just how good does one’s credit have to be— before the time is right to get a mortgage and buy a house?

For the most part (ie. there are exceptions to everything) as long as you are above a certain threshold, how much above the threshold makes very little difference.  For instance, whether your credit score is 741 or 759 makes absolutely no difference whatsoever.  And the difference between 719 and 779 might amount to $8 on your monthly payment.  I doubt that for most people waiting a year to bring one’s score up to save $8/month makes much sense.

The minimum required score changes from time to time, and there is some variability between lenders.  As a general rule, you’ll find mortgage brokers to be more flexible on credit scores than banks.  Currently, you can find lenders who will make competitive, fairly priced, fixed rate mortgage loans based on the following credit scores:

VA- many lenders make VA loans with scores starting at 620.  For those close to that mark, they’ll probably insist that there be no loan, rent or credit card payments more than 30 days past due during the most recent 12 months.

RD- lenders making these loans often dip to scores beginning at 600, and for the lower scores will have similar requirements to VA lenders.

FHA- lenders making FHA loans may dip even lower… say into the 580 range.  And once again, the lower the score, the more likely there will be stricter requirements on the absence of payments 30 days late in the past year, and on proving one’s rental payment history.

Getting a mortgage can be a PITA.  There is no doubt about that.  And for those with lower scores, an extra dose of patience and determination will likely be required.  However, with the right attitude, one with a lower credit score can obtain a mortgage and buy a new home.  To get the facts, just ask.

 

New Mortgage Program for Those With Damaged Credit

FHA has come out with a new mortgage program, designed to afford people who have taken a BIG hit to their credit, to be able to buy a new house.  It’s called the Back to Work program.  And, some local lenders are now making it available.  Here’s how it works…

If you had a short sale, deed-in-lieu, foreclosure, or bankruptcy that was caused by a reduction in household income of 20% or more, that persisted for at least six months and was due to a situation beyond the buyer’s control, then you may be eligible for the Right to Work mortgage program.

To be eligible, one must meet the following conditions:

1) Demonstrate good credit before and after the economic event.

2) Be at least 12 months beyond bankruptcy discharge or deed transfer (short sale, deed-in-lieu or foreclosure).

3) Have no late payments, judgments or collections during the past 12 months.

4) Have a 3.5% cash down payment if your credit score is 600 or better, or a 10% down payment if the score is between 580-599.  (If you do not have a credit score, then a 20% cash down payment will be required.)

5) Have proof that your rent or mortgage payments did not go 30 days late during the past year.

The Right To Work program should help some people to more quickly get beyond past burdens and to be home owners.  If you have questions, be sure to ask me.