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.
Your debt to income ratio or DTI, is a figure that allows a lender to analyze your monthly spending habits. They use your DTI to determine how you manage your money.
You want your debt to income to be as low as possible to ensure that your chances of being offered a lower rate is better.
How much debt do you have this month?
Think about all of the bills you have to pay for the upcoming month.
For example, Brandi pays $720 monthly for rent, $235 monthly for her car note, $200 monthly for her car insurance, and she makes about $100 monthly in credit card and utility bills. Brandi earns $4000 every month before taxes. So if we add up Brandi’s debt expenses and divide them by 4000, we get approximately 31%.
An article from consumerfinance.gov recommends keeping your debt to income ratio below 43% based on evidence from studies on mortgage loans. So when our friend Brandi is ready to move from her apartment into a new home, the bank will be eager to get things started for her, knowing that her debt to income ratio is low and that she has the ability to repay her loan.
Another factor that can help your debt income ratio is paying your bills on time and in full. Most banks offer the option to have money from your account wired directly to the institution you wish you pay. You can even customize the time and date that the wire will be released. As a result, before applying for a mortgage loan be sure that the job you are currently holding will provide you with the means to pay your current bills and a house payment.
Higher income means more flexibility to play around with financing options. What lenders don’t want to see is that you spend six months at every job and then bail. It shows instability and lenders won’t be so open to lending their money to someone who is in the business of making risky decisions by jumping from job to job.
Be sure to use that steady job to help build your savings. Why? Because of a thing called a Cash Reserve. Your cash reserve is your safety net. Money that you have saved up between your bank accounts will be evaluated by your lender. This extra money lets the lender know that if you fall on hard times or your expenses for some reason go up, you will still have the money to pay your household bills and still make regular payments on your loan, therefore keeping your DTI constant.
What lenders typically look for is a cash reserve that will hold you over for two or more months, so be sure to pad those savings accounts.
A meaningful proportion of current student loan borrowers will likely be flirting with a risky DTI just from student loan debt. 16% of Student Loan Borrowers Will Likely Have a DTI Over 20% Just From Student Loans. Below shows sample data from Lendedu: 10,000 pre-qualification applicants used.
The above statistics derive from proprietary data provided to LendEDU by student loan lender Funding U. DTI ratios for nearly 10,000 pre-qualification applications for private student loans were calculated by Funding U using metrics like projected first year salary, projected student loan debt upon graduating, and projected monthly student loan debt payments
Debt to income is an important factor when applying for a home loan. Be sure to take this critical component into consideration when you go to speak with your lender.
Mortgage & Homebuyer Concerns
House Prices Are The Culprit
Who would have guessed we would be back to the similar movie The Day After Tomorrow? All areas of the housing market are bracing themselves.
More then half of the industry are saying the rising of interest rates have been their biggest hurdle since the World Record Jump of 2007. The industry needs to drive forward with the digitization of the mortgage application process.
And future home buyers? Well, they’re right there with them. First time home buyers don’t have a vast inventory of affordable homes available to them and 20% have credit history challenges.
We having a growing presence in the purchase market that will require continued support and customization as we continue to play a meaningful role and drive demand in the housing market.
Without one we don't have the other.
Contact Us Today! 702-696-9900 Learn More About Our Mortgage Options Today.
#mortgage #homebuyers #realtors #thestruggleisreal #valleywestmortgage
Zillow is an online real estate database, founded in 2005, that uses a proprietary algorithm called the "Zestimate" to appraise property values based on undisclosed factors. Sellers can use Zillow as a marketing tool by appraising their properties, posting property information such as improvements and access to major roads; and comparing nearby property value appraisals. Buyers can freely access and track such information online. Zillow currently tracks 72 million valuations throughout the United States. According to Alexa, a toolbar that collects data on browsing behaviors, Zillow was ranked in the top 300 U.S. sites in terms of traffic viewing the site. That is an amazing accomplishment for any website. Do you think it helps having Rich Barton and Lloyd Frink, former Microsoft executives and founders of Microsoft spin-off Expedia as their founding fathers? We Do. So basically, Zillow is a Easy and Simple way for potential home buyers to look at the value of properties and find a reliable source of information as well as find local, trusted real estate agents as certified mortgage lenders.
Now that you have a good idea of what Zillow is, Why does Valley West Mortgage use the site? To answer your question, lets take a look at the Valley West Mortgage Zillow Page. Once a potential buyer finds a home they like, its time to find a lender. Zillow has a Lenders Section to their website, allowing potential home buyers access to find a Local Las Vegas Lender that best suites their needs and interests. That is the section where you will find Valley West Mortgage | Local Las Vegas Lender.
So now you know what Zillow is and why Valley West Mortgage uses it.
The Federal Housing Administration, also known as the FHA, has decided to bless borrowers this year by cutting mortgage insurance premiums. Who is the Federal Housing Administration? The Federal Housing Administration, simply called the FHA, is the government body that sets standards for the processing of mortgage loans. Most notably, the FHA insures loans made by banks that have been FHA approved. The Mutual Mortgage Insurance Fund created and backed by the FHA has grown exponentially in the past four years under the Obama Administration. This means that the FHA now has the flex room it needs to provide an opportunity for savings for deserving and responsible borrowers.
The cut in MIP (Mortgage Insurance Premiums) will apply to FHA loans with a closing or disbursement date on or after January 27, 2017. The FHA cut in Mortgage Insurance Premiums is going to do wonders for the borrowers who have to deal with this new environment of rising interest rates. The FHA is predicting that homeowners will be able to save an average of $500 per year. The cut in Mortgage Insurance Premiums means that the cost of housing will decrease and the opportunity for mortgage credit availability will meaningfully expand. In a nutshell, more borrowers will have the opportunity to take out FHA loans because the cost of obtaining an FHA loan is being reduced.
We love originating loans for our borrowers at Valley West Mortgage. We (as your lender) bear risk every time we lend money to homeowners. To offset that risk, borrowers pay a Mortgage Insurance Premium at closing as well as an annual mortgage insurance premium that is a small percentage of the loan amount. That premium paid by the borrower then goes toward the Mutual Mortgage Insurance Fund, an account that will pay back the lender if the mortgager falls on hard times and defaults on their loan. Mortgage Insurance Premiums being cut by the FHA means that we will be able to originate even more FHA loans for our borrowers because the required premium at closing will be of a smaller amount than it has been in the past.
The Federal Housing Administration or FHA, charges a small percentage of your loan amount to insure your loan against a default. This small percentage that is paid once at closing, and once annually is called your Mortgage Insurance Premium or MIP. The MIP is a part of the cost of your loan. When the cost of the mortgage insurance premium is cut, it allows more borrowers to meet the debt to income ratio that is required to take out an FHA loan. Borrowers that may not have been eligible to meet the standards before now have a chance to enter into the homeowners world. Lenders for whom business may have been slow as a result of rising interest rates will now be happily overflowed with business from borrowers who are looking to take advantage of this remarkable opportunity.
When doing your research, always use great sources! Check out the sources for this article below.
- WHITNEY RUSH, VALLEY WEST MORTGAGE