Things are moving so quickly in the market with the coronavirus being at the forefront, everyone is feeling hardship across the board.
FHA Loans provides mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. It is one of the largest insurers of mortgages in the world, insuring more than 46 million mortgages since its inception in 1934 and it's the only government agency that operates from its self-generated income.
Self-generated income which means the Mortgage insurance premiums that is collected from borrowers via lenders are used to operate the program.
FICO scores tells the lender what type of credit risk you are and what your interest rate should be to reflect that risk by utilizing a FICO formula.
The most commonalty used :
Equifax Beacon 5.0
Experian/Fair Isaac Risk Model v2
TransUnion FICO Risk Score 04
We’re seeing what’s “good” for rates can be bad for lenders, and what’s “good” for the market can be bad for home buyers. This tug of war has caused servicers to implement drastic measures to keep up; includes raising the minimum FICO. If you have questions or concerns please contact your lender right away.
We know with any purchase process gathering all of the necessary documents can be quite hassle even for the most organized. All lenders want and need detailed information about your finances to determine if you quality for a home loan.
We've provided a basic list that can help assist with this daunting task. Keep in mind each situation is uniquely different so if you don't know what you need ask your lender.
Lenders want to know that you'll be able to repay the loan. Depending on your income history and size of loan, you may have to show additional documentation
Your debt can seriously impact your debt-to-income ratio which can be Up to 57% FHA Up to 50% for Conventional across the board*
Having assets just in case unexpected expenses occur after you close on the house is a factor in the home buying process.
If you received money towards the down payment as a gift, you may be required to provide documentation/letter stating it was a gift and not a loan.
Bank Statements, investment records, retirement accounts, real estate, auto titles, and any other investments require that you provide documentation.
This can include a signed 4506-T form, that allows your lender to get a transcript of your tax returns from the IRS.
If you have filed bankruptcy in the past several years, you may be asked for your bankruptcy discharge papers.
Documentation that you're involved in any lawsuits or co-sign on any loans
If you're renting out your current home a lease agreement and income received may need to be provided.
If you're a renter with a private landlord, 12 months of cleared checks on time may be required or a form confirming on-time rent.
The mortgage industry is striving to make this process more streamline by offering services that are more automated and user friendly.
We all know things happen that are out of our control. An unexpected medical bill or a car emergency. These types of situations can throw off your whole budget and cause you to worry about missing a mortgage payment or several payments. Do you know what to do?
Always be prepared to tell the why you can't make your monthly payments and whether or not this is temporary or permanent and also provide them with other details about your income expenses. In some cases, your mortgage servicer may have programs in place to help you avoid that dreadful word, foreclosure.
It's free and can help you find a counselor near you. They can assist to help you figure out if you qualify for help and help you further understand any assistance your mortgage company may have offered you.
In general, not paying your mortgage will be reported by your lender to the three major credit bureaus and they will lower your credit score. In addition, after a grace period (generally a week to 15 days after the payment due date), a late fee will be added on to the payment you failed to make.**
When you're going through a situation like this, it is imperative to watch out for scams. Never pay anyone to help you to avoid foreclosure. They might tell you they'll save your home foreclosure when they're really just taking your money.
If and when this ever happens make sure you're in contact with your mortgage servicer. They're more likely to work with you if you let them know before you miss a payment.some lenders being willing to offer informal forgiveness or being willing to hold off on late fees or reporting to credit agencies, in some cases people can qualify for forbearance programs. These are formal programs where people facing financial problems can miss a payment or make a lower payment for a period of time while they sort out financial problems.**
* Servicer- The company you make your payments to.
**Depends on the mortgage servicers discretion.
If you search the internet for 'home buying' you'll find an abundance of tips and tricks but they're all pretty much the same.
The end result is you purchasing your dream home so we're here to help you through the process from start to finish.
There are 4 categories:
(A) Conventional that conform to standards require as little as 3% down. 20% down no PMI required
(B) FHA (Federal Housing Administration) permit as little as 3.5% FICO Score of 580 or higher
(C) VA requires no down payment, no minimum credit score. May pay a VA funding fee.
We're here to help you along the way. When you're ready to purchase let us know!
Who’s your favorite X-Men character? Wolverine? Storm? Professor X? What makes that character your favorite? For some people it’s the character’s courage, or perhaps their good looks, or their intelligence. My favorite mutant character is Mystique and what makes her my favorite is her superpower. Mystique is a shape shifter, meaning she can change her body and her voice to look like anyone she chooses. Did you know that outside of the comic book world there are real-life, everyday people with super powers? You are one of them. This article is going to walk you through tapping into and applying your purchasing power.
Though I’m sure you’re not a mutant like the characters of X-Men, your purchasing power is a great power to exercise when you’re looking to buy a home. Your “Purchasing Power” is the ability and the flexibility to get the home you want. Your purchasing power can be increased by applying the following practices:
Though the ultimate goal is to eliminate your household debt all together, depending on the amount of expenses you have, you may not be able to eliminate all of your debt all at once. In the meantime, decrease your debt by eliminating what you can. Pay off any outstanding medical bills. Return those overdue books to the library. Most importantly, stop using your credit cards. The minute you decide that you want to purchase a home, stop all usage of credit. Every time you swipe that card, you’re swiping yourself into debt.
Similar to how eliminating all of your debt will take time, improving your credit score will take time too. It’s easy for credit scores to drop, it’s a little tougher to bring them back up. Every 30 days the credit bureaus update with any new financial information from the previous month. That means there’s only 12 opportunities within a year for your score to go up (once each month). So each month you’ll have to make a conscience effort to change something for the better on your credit report. Remember, when credit does increase, it’s usually only increasing by a factor of roughly 1-15 points. Big events (like a delinquency or having an account go to collections) can change your credit score drastically, negatively hitting your credit anywhere in the range of 100 to 150 points so be sure to pay everything on time if not early.
When you do your application to purchase a home, your credit report will be pulled and lenders will evaluate how much money you can be trusted to borrow. Do yourself a favor and check your score before the lenders do. I read once that at least 5% of Americans have a major error on their credit report. This could be caused by something as simple as someone having the same name and birthday as you. You’d be surprised how many John Smiths were born on the same day. Check your credit report to dispute any incorrect information that could be hurting your credit score.
Another thing that lenders look for when processing your mortgage application is your debt to income ratio. This ratio compares how much debt you have to how much income you earn. It is calculated by dividing the total amount of your monthly expenses by your gross monthly income before taxes. The lower your DTI is, the more money lenders are likely to let you borrow. Increasing your income can also lower your DTI by adding to the income portion of your ratio. For example, if your monthly debt totals at $1500 and your gross monthly income is $3000, your DTI ratio would be .5 or 50%. On average lenders look for a DTI ratio of no more than 43%. If you were to pick up a second job that brings in an additional $2000 per month and you could raise your total income to $5000, your DTI would drop to 30%, a much more ideal percentage.
You have powers nestled deep within the financial center of your brain. It’s easy to tap into those powers by doing things like paying off debt and clearing up your credit. Your purchasing power gives you the flexibility to make broader decisions when it comes to purchasing. Purchasing power also means better borrowing opportunities and access to different types of loan programs. Increase your power today!
When doing your research always be sure to consult great sources. See the sources for this article below!