The Magic Number - What Does Your Credit Score Need to Be to Qualify for a Home Loan
Over the course of a lifetime, financial development can lead to some wonderful opportunities. A person's financial development and state of affairs is something that is particularly important when it comes to taking out a bank loan to further progress in life, and the largest loan most people will require is a mortgage for a home purchase.
Since the process of getting approved for a mortgage is heavily dependent on credit history and that three-digit credit score that reflects reliability as a borrower, you should always put forth practices to keep that number healthy and growing.
However, how much importance does a credit score hold? Does that magic, three-digit number need to be above 800 in order to get approved for a mortgage? Answer is absolutely not.
The FICO Score: The Magic Number That Counts
When you apply for a mortgage, you will have to provide certain information so they we may pull your credit report. Your credit score/history and ability to verify your income are the TWO most important factors in obtaining a home loan.
Fair, Isaac and Company is the scorekeeper of your FICO score, which ranges from 300 to 850, 850 being the highest of all scores, and 300 being the lowest.
The 600 Range: Fair And Good Credit Mortgage Options
If your credit score isn't perfect , you need not worry too much. There are many options available for those with credit scores above 620.
With a "fair" and "good" credit rating falling between 620 and 719, there are options available to get approved for a mortgage well under the perfect 800 mark. An FHA loan is a type of mortgage loan that is insured by the US Federal Housing Administration, offering an option with more flexible qualification measures. For homebuyers with a credit score above 620, this is a viable and common option.
720 To Perfect: Under 800 And Still In Great Shape
The median credit score in the United States is 723, and anything above 720 is placed with the marker of "excellent credit." Therefore, just because you may range just slightly above 720, which may feel miles away from a perfect 800, you are in GREAT shape when it comes to getting approved for a mortgage ( provided you have a verifiable income) .
Keeping an eye on your credit rating and understanding the measures that are used in determining your credit score will certainly help you maintain a good score. Of course, speaking with a mortgage professional ( like me) and receiving expert advice is always recommended.
For specified information on your particular situation, please contact me at 678-773-0651 or Kathy@KathyDelbridge.com to discuss your options for receiving a mortgage loan.
Also, you will find VALUABLE information regarding credit scores by visiting the following page that is found here on my website.
Whether it's your first time purchasing real estate or you're a seasoned professional, here are a few tips to make shopping for a new house more pleasurable.
1. Get Help
Searching through all of the available properties on the market can be mind-boggling.
Find a professional real estate agent to help guide you through the homes for sale and select one that meets your family and financial needs.
2. Start Looking Now
Finding the perfect house can take longer than you might think, especially if you're looking in a competitive market.
If you're looking at getting a good deal on a foreclosure or short sale, then these transactions can take even longer because you're likely waiting on the bank to make the final call on your purchase transaction.
Try to be patient. The more thorough you are in your search, the happier you'll be in the long term.
3. Don't Settle For The First Place You See
Searching for a house can be extremely emotional.
If you think you've found the one, then take a step back, consult your real estate agent and go over your housing checklist one last time before writing an offer.
4. Weigh The Pros And Cons
Almost any property will need a few improvements; even newly constructed houses usually need improvements like landscaping.
Sellers are more savvy now about how to make cosmetic changes to catch a buyer's eye, so look carefully.
There will still be things you want to change, so weigh the difference between the cost of those repairs and the sales price of the home.
If you really want a house even though it's going to take a lot of work, make your offer accordingly.
5. Make Sure Your Financing Is In Order
Having financing done in advance makes the process of buying homes for sale much easier because you'll know how much you can afford.
Your loan officer can also help you determine what your monthly payments will be based on how much money you borrow.
A great first step is to consult with a licensed mortgage financing specialist to go over the available programs and terms available in the area.
I'd love to consult with you on your new home purchase. I can be reached at 678-773-0651 or via email at Kathy@kathydelbridge.com
Do You Really Know the Rules On Short Sales and Obtaining a Mortgage after a Short Sale
After being the in mortgage industry for over 10 years, one of the many important lessons I have learned is to be careful in your interpretation of lending rules and guidelines. Understanding how a short sale can affect you when obtaining a mortgage after a short sale is one of those rules where you must be careful in your interpretation of the rules.
I recently had a closing with a client who would not have just had that closing had they not also taken the time to speak with me, AFTER they had been told "NO" by another lender.
This particular client had a short sale which had occurred about a year and-a-half prior to being in contact with me.
When the first lender looked at the client's credit report and saw the verbiage that the client's mortgage had been settled for less than the amount owed ( meaning they had a short sale) and since that short sale occured 1.5 years ago, this lender informed the client that they would need to wait a full 3 years after the short sale before they could obtain a loan via FHA financing.
While FHA guidelines do state that under most circumstances, a borrower is not eligible for FHA financing after a short sale, until 3 years from the date of the short sale, there ARE some extenuating circumstances and other factors that WILL allow financing before 3 years.
It is vital that borrowers with a previous short sale insure all the facts are considered before being given an automatic NO and told to wait 3 years. If you are one of these borrowers or if you are an agent working with a borrower with a previous short sale, make sure their lender has considered all the facts and reviewed their case carefully.
I am glad these buyers contacted me and even more glad that we got their home loan closed recently. They literally went from a " No, you can not buy" to a "Yes, we can get that done and close you right away". We were at the closing table within 2 weeks of them going binding on a contract for their new home.
That's one the many reasons I LOVE what I do.
Best wishes and call me if you need professional, knowledgeable and consultative advice.
Borrowers With Existing FHA Loans Get a Big Refinance Boost - Upfront and Annual MIP Being Reduced
In a press conference dated 3/6/12, President Obama announced that borrowers with existing FHA loans will receive a huge boost, due to the Upfront Fee and the Annual MIP being reduced.
This announcement should help many existing FHA borrowers save more money on their Streamline Refinance loans, compared to current MIP rates they have been receiving after the Annual MIP increased in Oct 2010 from .55% to 1.15%.
The new fees are for borrowers whose FHA loans were issued before June 1, 2009. An estimated 2 to 3 million borrowers could take advantage of the savings, which could reduce mortgage payments for the typical FHA borrower by about a thousand dollars a year, according to the administration.
Borrowers who refinance their existing FHA loans will pay an upfront insurance premium equal to 0.1% of the mortgage amount -- $100 for a $100,000 loan -- plus an annual fee of 0.55%.
To read more on this topic, please click on this link:
This is GREAT news for existing borrowers with FHA loans, who have wanted to refinance to today's lower interest rates, but their MIP payment was doubled, so it cut into their refinance savings.
In my opinion, this will be a boost. If you are a homeowner that is able to take advantage of this additional savings, get started while the rates are still low and be sure to apply your savings appropriately.
Make it a GREAT DAY!
HUD Announces Another INCREASE to Upfront Mortgage Insurance and Annual Mortgage Premium
In a Press Release dated February 27, 2012, HUD announced that they will be increasing the Upfront Mortgage Insurance Premium (UFMIP) and the Annual Mortgage Insurance Premium ( MIP).
Important dates to remember are April 1, 2012 and June 1, 2012, as these are the dates when the changes will take effect.
The Temporary Payroll Tax Cut Continuation Act of 2011 requires FHA to increase the annual MIP it collects by 0.10 percent. This change is effective for case numbers assigned on or after April 1, 2012. FHA is also exercising its statutory authority to add an additional 0.25 percent to mortgages exceeding $625,500. This change is effective for case numbers assigned on or after June 1, 2012.
The UFMIP will be increased from 1 percent to 1.75 percent of the base loan amount. This increase applies regardless of the amortization term or LTV ratio. FHA will continue to permit financing of this charge into the mortgage. This change is effective for case numbers assigned on or after April 1, 2012.
Once both of these are increased, borrowers will see an estimated payment increase as outlined below:
To read more about this press release, go to http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2012/HUDNo.12-037
If you are a homebuyer looking to purchase a home and want to insure you save money on your new loan, be sure to act now. Case numbers are not assigned until you have made an application and have a contract on a new home.
Hope you find this information helpful.
Have a GREAT day!
Your Mortgage Specialist, Kathy Delbridge
Is Metro Atlanta Seeing a Median Homes Sales Price Increase?
I received what I felt was an excellent way to start my week and what several people would consider excellent news for the housing market - at least for now.
I came into the office this morning and found in my inbox that 2 appraisals were delivered over the weekend for 2 of my buyers.
One purchase is in the $130K range in Henry County, while the other is in the $350K range in Fulton County - Buckhead area.
What was discovered during the appraisal review is that the Median Home Sales Price has increased in both of these areas by 8.6% during the past 12 months.
Could this be an anamoly or is it the start of a trend?
At this point, I am going to absorb and accept it has very good news and look forward to much more good news coming this week!
Have a great week everyone!
HUD to Make Some Very Important Announcements Soon: Most Important Is Regarding Seller Concessions
In an announcement dated, January 20, 2012, Acting Federal Housing Administration (FHA) Commissioner Carol J. Galante announced the latest in a series of steps to protect and strengthen the FHA’s Mutual Mortgage Insurance Fund, while enabling the agency to continue to fulfill its mission to provide access to homeownership for qualified borrowers.
One of the biggest announcments we will see soon is that FHA will propose to reduce the maximum allowable seller concessions from its current level to one more in line with industry norms.
Part of the reasoning is they feel that current level of 6% allowable seller concessions exposes the FHA to excess risk by creating incentives to inflate appraised value.
I tend to disagree that it creates an incentive to inflate appraised values. There have been so many guidelines put in place over the last 2-3 years that, in my opinion, has eliminated any concern over any inflated values.
While I understand that FHA/HUD need to insure we are able to maintain and keep FHA financing available for homebuyers, I feel they need to really look at the root cause of loan defaults and solve that problem.
Many homebuyers really could use the assistance of seller paid concessions. If the value is there and it is not an artificially inflated value, I say let the homebuyer get in their new home with the FHA standard 3.5% down payment and keep the additional money it would costs them to cover their settlement charges.
On smaller purchase prices, the maximum allowable seller concessions is needed in most all cases. On a $150,000 purchase price, 3% will not cover ALL closing costs and prepaid items for a borrower.
In our current economy, let's help homebuyers keep those reserves for those unexpected occasions when those funds are really needed.
You can read entire Announcement from FHA by clicking on the following link:
If you have any comments you would like to share about this post, feel free to comment.
Fannie Mae is currently offering buyers up to 3.5% in closing cost assistance through June 30, 2011.
The HomePath property buyer must meet the following qualifications to be eligible:
In a few states, a bonus promotion may be available to selling agents who close on an owner occupant property meeting the above terms & conditions.
Retail and public entities are eligible for the incentive; however pool and auction sales are not eligible.
The incentive may not be available for a property where Fannie Mae acquired the property in connection with financing under a reverse mortgage. Ask the listing agent for details
Fannie Mae reserves the right to remove any property from promotion or end the promotion at any time. Any dispute over the payment of the incentive shall be resolved by Fannie Mae in its sole discretion.
Buyers should consult their lenders for guidance on financing. Lenders and mortgage products may impose their own limitations on the use of the 3.5% incentive. For example, the lender may consider the incentive a Seller Contribution and limit the amount to 3.0%. In those instances, the remaining 0.5% will no longer be available to the buyer.
Potential Government Shutdown / Impact to Government Loans - MUST READ!
Implications of Government Shutdown
While we are still hopeful that a shutdown will be avoided (or another continuing resolution passed), it is unlikely that there will be any decision until the last minute. We understand the President is meeting with Speaker Boehner and Senate Majority Leader Reid at 1:00 p.m. EDT today.
Below is the latest information we have on the implications at the housing agencies. However, no final decisions have apparently been made. We do expect FHA & Ginnie Mae will publish FAQs if the shutdown does occur.
We have been advised that FHA Connection will be operational except that you will not be able to perform CAIVRS' checks or obtain insurance endorsements (including lender insurance). You will also not to be able to pay upfront premiums. However, we have been told that you will be able to obtain case numbers.
We recommend that clients ( this is the lender) run CAIVRS' checks immediately on all loans that you want to close in the next week or two in case the shutdown does occur. A CAIVRS' problem is likely the most immediate impediment to obtaining insurance once the loan the program is reinstated.
If a shutdown is announced, Ginnie Mae has told us that will publish FAQs and answers on the website to address program operations. We have been told that functions such as handling of principal and interest payments to investors in pools and "proceeding with pooling as pool or pool packaged are delivered" will continue. It is unlikely that Ginnie Mae will provide new commitment authority during the shutdown though no final decision has been made.
USDA has advised us that lenders will be able to close loans for which they had already received a commitment. However, lenders will not be able to get the Loan Note Guarantees for them until the shutdown is over.
During the shutdown, USDA will not issue any new commitments or Loan Note Guarantees for closed loans. Unlike FHA, USDA will not operate GUS, its automated system, during any shutdown.
VA has indicated that they will continue business as usual during the shutdown. We have asked VA if there has been any change.
We will update you on the possible shutdown as soon as we have new information.
Let's pray we do not get affected by this, but we must be prepared just in case.
TWO Very Important Dates Approaching / Affects FHA Homebuyers and certain VA eligible Military Personnel
There are two very important dates that every FHA Homebuyer must be aware of, as well as certain military personnel seeking homeownership. Here they are:
If you'd like additional information on the full details on each of these, be sure to read my two previous blog posts prior to these two posts.
I am here to help and LOVE helping new homeowner's purchase their new home!
Enjoy and make it a GREAT day!
HUD Announces INCREASE In the Annual Mortgage Insurance Premium
HUD announces in a mortgagee letter dated February 14, 2011 that they would be increasing the annual mortgage insurance premium by 25 bps ( basis points) that is collected on FHA loans.
Who does this affect and what does this really mean?
Overall, here's an estimated payment increase from where we are currently, based on the annual premiums as of October 4, 2010.
Purchase Price EST Payment Increase
Not that this has any bearing on immediate changes, but here's an example how much higher the mortgage insurance will be after 4/18/2011, compared to where they were Prior to October 4, 2010.
Purchase Price EST Payment Increase
These new changes will become effective for all FHA case #'s assigned on or after April 18, 2011.
If you know someone who is looking at purchasing a home and intends to use FHA financing for their financing, make them aware of this. With rates expected to hit 5.5% this year and this increase as well, there is NO time to delay. Even if the overall payment ends up being $50 more each month, that is $3000 over the next 5 years. That's the average costs to paint your home.
And, if you know someone who has an FHA loan that needs to be refinanced, make them aware of this before these changes occur.
HUD has actually been authorized to increase this premium up another 40 bps ( basis points). That would be almost 3 TIMES the amount of the monthly MI a client paid prior to October 4, 2010.
I am just a phone call away at 678-773-0651 and can always be reached via email at 678-773-0651.
Kathy Delbridge, CMPS®
First Time Homebuyer Tax Credit for Military Personnel and Foreign Service Employees
A little-known (and mostly forgotten) provision of the Home Buyer Tax Credit bill that became effective on Nov 6, 2009, is that certain military personnel and Foreign Service employees have an EXTRA year to purchase a home and qualify for the tax credit.
In addition to that, if they sold a principal residence between Jan 1, 2009 & April 30, 2010 because they had to relocate at least 50 miles due to “orders”, they qualify for a tax credit, even if they owned a home between the above time periods. Income, age and sales price limitations still apply.
And must have had:
Tax Credit Dates Extended to:
Can get tax credit if:
Also, as a reminder. For every VA loan that I close, I do make a donation to the Wounded Warriors Family Support Fund, or any other military charity of the veteran's choice.
You can also download the following document that also details the First Time Homebuyer Tax Credit for military personnel. Click Here to view.
HUD Announces 2011 FHA Maximum Mortgage Limits
HUD announced new Mortgage Limits for 2011, on 12/2/10 and the Metro Atlanta area remains unchanged at $346,250.
Most of the remaining counties in GA will be at the floor of $271,050. There are a couple of counties in GA with higher mortgage limits that are closer to $300,000.
To read the HUD Mortgagee Letter in it's entirety, click on the following link:
The following two links will take you to Attachments which will list the maximum mortgage limits in ALL counties within all 50 States.
This is goods that several major metropolitan areas still have relatively higher mortgage limits that in previous years.
If you or anyone you know needs assistance with obtaining FHA financing, please do not hesitate to give me a call.
FHA loans remain a valuable financing tool, especially with the added benefits of the assumability of FHA loans. Imagine you are selling your home in 5-7 years and a potential buyer has the option to assume your FHA mortgage at 4.25%, or buy another home down the street ( that does not have FHA financing) and have to go with current interest rates at the time ( assume they are at 5.5%). Which house do you think they will be more favorable to purchase ( assuming both homes are comparable)?
Something to think about.
Have a great day and feel free to post comments or questions to this post.
Kathy Delbridge 678-773-0651
Do You Have Experience with DRAGON Speech Recognition Software?
I recently noticed a TV advertisement Dragon Speech Recognition Software, and I am looking for comments/reviews from current users.
I have noticed that they have a Home Edition and a Premium Edition.
If you have used either of these, I'd love to hear your feedback. I am very serious about purchasing this, and I am trying to determine if I need to pay the difference for the Premium Edition.
It looks like both of these can save me time and help me be more productive.
Dragon Speech Recognition Home or Premium?
If you are reading this and have not heard of this software, go visit http://www.nuance.com/givedragon/, to learn more.
I look forward to your comments.
Save the IBD Bill: Only a few weeks left!
Legislators returned to Washington this week for the beginning of the "Lame Duck" session of the outgoing 111th Congress. A new Congress will convene in 2011 -- there are only a few more weeks left for the current Congress to be in session. If the Bill is not passed by the end of the year, we are back to the drawing board -- a new Congress means that a new Bill must be introduced, new co-sponsors must sign on, and the entire process will begin again.
Please don't let this happen. It takes so little time to support the Bill and help the 1.4 million Americans living with IBD. Five minutes is all it takes to do one of these:
If you've already done any -- or all -- of the above, we thank you for your support, and ask that you give us just five MORE minutes of your time. Please do what you can! Many voices, working together, will help push this Bill forward at this very critical time. Take action today!
Contact our Information Resource Center: 888.694.8872 or www.ccfa.org. For tips, sharing, and support from other people with Crohn's disease or ulcerative colitis, join our free CCFA Community site.
To cure Crohn's disease and ulcerative colitis, and to improve the quality of life of children and adults affected by these diseases.
Thanks to everyone who is supportive of trying to raise awareness and find a cure for Crohn's and Colitis! PLEASE help us by taking a few minutes of your time to do this!