|
New
- apply on line for your home loan - complete application only a click away!
Ask
The Loan Expert - No Cost - No Obligation!
Topics in this issue …
If the house is priced right, but not selling …
Back to Home Mortgage Lending Inc. Main Page
Credit Scores… FNMA and FHLMC are now again in their second year of requiring credit scores. Most lenders began seeing the credit scoring becoming a critical part of the loan approval process in July 1996. All loans now sold in the secondary market are credit score driven!
The credit scoring is not new - it was used back in the 70’s with no success. But FNMA and FHLMC watched the performance of those loans versus not driven off credit scores. The results are a borrower with a score of 680 or more is less likely to default. It is now industry standard, if your FICA score is below 640, you are no longer qualified for "A" paper loan!
The numerical credit scoring ranges from a low of 350 to high of 845. Fair Issac is the one’s who designed the scale. The score takes into consideration the borrowers re-payment history, amount of credit allowed, the highest balance, borrowing patterns, over limits, etc.
The most impact of the credit evaluation reviews the consumers last 2 years of credit activity. For example, if a borrower acquires 8 new credit cards 4 months ago, this individual will have a low score. Primarily because there is not a 2 year history establishing the borrowers ability to handle those payments.
Also what impacts the score is every time the consumer allows someone to run a credit inquiry on their credit report. For Example, a consumer goes to look at a new car, the car dealership wants to run your credit to secure financing and makes a credit inquiry on the consumers credit. This inquiry can reduces the score by approx. 5 to 10 points per inquiry.
Unfortunately, the same effect takes place when "XYZ" credit card company inquires on your credit to up your line of credit, or to give you a new credit card, The same thing takes place on acquiring a mortgage!
Financing Programs
Their are hundreds of different types of
mortgages. Don’t miss sales by not having the knowledge. Here are just a few critical
programs to name a few.
It gives the borrower an opportunity for a FRESH START and a discount in the interest rate because it is fixed for two years then it rolls over to an adjustable.
The great thing about this loan is, if the borrower makes all payments as agreed, they can refinance out of this loan before it rolls over to the adjustable and obtain a lower fixed interest rate.
The 5/25 and 7/23 are designed for "A" paper borrowers. The 5/25 will go to a maximum of 80% LTV and the 7/23 will go to 90% LTV. For example a borrower that takes a 5/25 plans on staying in the property 5 years or less, the borrower receives a discount in the rate. Same thing applies on a 7/23.
The lenders are betting on the borrower paying off the loan prior to the rollover, therefore the lender can lend that money out 5 times versus a normal one time 30 year loan. Its more profitable for the lenders.
For the last year or so, there are what I call half-witted insane lenders. We have been waiting to see if these lenders were a flash in the pan or not. Several of the investors made the year and achieved higher than expected goals. We are approved with several of these lenders that are willing to offer a second TD or line of credit up to 100% of property value! Some of these lenders are willing to go to 125%, provided that 40% of the funds are used for home improvement. We even have a no-qualifier second ! Some of the loan programs may not require an appraisal!
IF the house is priced right and not selling…
Sometimes if a home is priced right and its not selling, here are some marketing ideas that might just help you double end a transaction or to at least help make the home sale.
Consult your broker, but if you honesty know the home is priced competitive, instead of asking for another price reduction, look for ways to encourage the buyers to buy this home. Have the seller assist the buyer in closing costs, or paying points. Maybe even consider having the seller pay "X" points to obtain a certain interest rate.
Example, This property has been approved for a 30 year fixed rate loan at 7.00%, that’s a monthly investment of $ 123.XX. Some buyers need things broken down the majority of the consumers are concerned on a monthly basis. Another situation is explaining to the buyer "Now that we have narrowed your selection down to your two favorite homes, one difference between home #1 and home #2 is a difference of $ 12.00 a month.
Sometimes this helps the buyer to see that they can acquire either home. The difference may be forgoing one lunch each month. It really helps to get your buyers Pre-qualified or even Pre-Approved. Home Mortgage Services has a "Pre-approval Certificate" for qualified home buyers.
With the new technology of the Internet and other computer programs, we are going to be able to take a 1003 and have written loan approval within hours subject to conditions. The computer will be able to approve certain clients subject to good FICA scores, job stability, reserves, etc.
If our client is not a slam dunk loan then we still can go in with documentation and receive approval subject to property.
BAD CREDIT- Equals Opportunity… More and more home buyers in today’s market place either had or are having credit problems. There are becoming lot’s of solutions for these borrowers, don’t throw them away! Over 40% of today’s consumer have or had credit problems.
We had a borrower that had a recent bankruptcy. We were able to obtain a first mortgage for 70% and the seller carried back a small second.
People’s credit is graded, just like being in school. We grade the credit report A,B,C and D. Remember, if some one has bad credit its not the end of the world. If you were lending the money you would want a higher return on your investment. The higher the risk the higher the interest rate. We are not talking about loan sharks. If someone’s credit is abused from a divorce, employment problems, medical, etc. these individuals can still purchase a home, re-establish themselves by making the mortgage payments as agreed. After a year or two of re-establishment the individuals can refinance from a "C" paper to a "B" or even an "A-". That means they can now obtain a lower interest rate with better terms. If a potential buyer tells you they have a couple a credit dings, don’t assume they are a "B" or "C" borrower. If they are serious have us run a Factual Credit report. Remember this does lower their FICA score! Some "B" and "C" lenders are credit score driven and some are not. Some are so credit driven that the interest rate is set by their FICA score with no questions asked.
If you have any special topics that you would like in our next issue, call the office and let us know.
Serving ALL of Oregon and California |
| For any Mortgage questions please call |
(541) 471-9000
email: info@homelend.com
1501 NE 6th Street
Grants Pass, OR 97526
Back to Home Mortgage Lending Inc. Main Page
All rights reserved. Copyright ©1997-
2007
Home Mortgage Lending Inc.