Sub-prime or bad credit mortgages are life savers for the right kind of borrower and unmitigated disasters for the wrong kind of borrower. Here is a list of characteristics of the borrower for whom a bad credit or sub-prime mortgage might be appropriate: Continue reading ‘Who Should (and Who Shouldn’t!) Get a Bad Credit Mortgage’
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Loading ...All the hype over FHA’s “reforms” is missing a few facts. Yes, FHA now requires a 580 or better credit score if you want to put 3.5% down instead of 10%. And yes, those with scores less than 500 are now ineligible for FHA financing. But have things really changed in practice? No, they have not. Continue reading ‘FHA Reform: Can You Really Get a Loan with a 500 Credit Score?’
(4 votes, average: 4.75 out of 5) Loading ...Individual Development Accounts, or IDAs, were designed to fight poverty and help people of modest means get an economic foothold in society. Read on to see how these accounts work and if one might help you quickly save a down payment for a home. Individual Development Accounts (IDAs) are special savings accounts for low-to-moderate income people. You don’t just earn interest on these accounts — the best part is that every dollar you contribute is matched. Depending on the IDA in your area, matching donations may range from 1:1 (every dollar you deposit is matched by a one dollar donation) to 1:4 (every dollar you contribute is matched by four donated dollars). Continue reading ‘Need a Down Payment for Mortgage? Individual Development Accounts Can Help!’
(1 votes, average: 5 out of 5) Loading ...A couple of George Washington University instructors discovered a big reason that people who buy new homes may regret the mortgage choice they make. The phenomenon is called “cognitive resource depletion,” but that fancy phrase just means that once you have broken your brain searching out your property, you lose the ability to make smart decisions about your mortgage. Your reasoning goes to pot, and your achy head cries “no mas!” Continue reading ‘Study: One More Reason to Shop for Mortgage Before Shopping for Home’
(2 votes, average: 5 out of 5) Loading ...Like it wasn’t bad enough getting ONE bad credit mortgage approval, explaining away the time your roommate borrowed your card to buy a keg and didn’t tell you, the missed car payment because Nordstrom’s twice-a-year shoe sale comes only, well, twice a year, and being forced to pay an old collection for the check you bounced to the pizza guy back in college. You got past all that, your approval is in your sweaty hands, and you can relax, right? Wrong!
Now, you’ll have to pass two credit checks — lenders will not just pull a credit report when you apply for your mortgage, bad credit and all, but immediately before you close escrow and move into your new home.
Fannie Mae’s new Loan Quality Initiative, starting June 1st, brings new rules to mortgage lending, hopefully improving the quality of the loans that get approved and “unapproving” those that slip between the cracks before they go sideways.This means, lenders that sells mortgages to Fannie Mae must determine that “borrower liabilities incurred up to, and concurrent with, closing are disclosed and evaluated in qualifying the borrower for the loan.”
The most expedient way for most lenders to accomplish this is by pulling an additional credit report just before closing. What can derail your approval? Additional inquiries (which indicate that you’re looking for new credit, so every creditor who you applied with will be asked if you were granted new credit and under what terms). And delinquencies that materially lower your credit score. Or new accounts, which can change your debt-to-income picture. At a minimum, these items can delay your closing, maybe causing you to blow a lock. At worst, you could lose your property.
So, just because you have a mortgage approval, you don’t a house. Don’t buy anything new until after you close, and the fat lady, um, hands you the keys.
(No Ratings Yet) Loading ...500? 580? 660? Many people with credit problems would like to know exactly how much do they need to improve their bad credit before they can seriously think about getting a mortgage. Aside from bad credit mortgage lenders, the most forgiving lender on the market is probably FHA. But confusion about FHA’s minimum credit score requirements is abundant. Articles about credit problems quote FHA minimum scores at 500, 580, 600, 620, 640, 660, and even 680. And the FHA Web site doesn’t offer much help either. Continue reading ‘What Is the ** Real ** Credit Score Needed for an FHA Mortgage?’
(1 votes, average: 5 out of 5) Loading ...What Is a Mortgage Revenue Bond Program?
Mortgage Revenue Bonds (MRBs) are tax-exempt bonds that state and local governments issue through housing finance agencies (HFAs) to help fund below-market-interest-rate home loans and / or down payment assistance for qualifying home buyers. To be eligible, you must be a first-time home buyer, and your household income must not exceed 115% of the median family income in your area.
How MRBs Benefit You
1. The program makes it easier for you to qualify if your income is not high. Because your interest rate is one to two percent lower than the market mortgage interest rates, your home will cost less to own, so you have a better shot at qualifying.
2. Programs like Freddie Mac’s Home Possible mortgages for low- and moderate-income borrowers works in combination with local programs that offer down payment assistance and secondary financing to qualify more borrowers. So you can combine the advantages of down payment assistance with subsidized mortgage interest. That makes it easier for you to achieve home ownership.
Important Points
1. To find out if you qualify income-wise, you can look up the median household income in your area. Multiply by 1.15 and see if your gross (before tax) household income doesn’t exceed that figure. Fannie Mae has a site that lets you look up the income for your town or county. Click HERE to find yours.
2. To find MRB programs in your area, search on “(your state) mortgage bond program” and you should be able to get information on available programs.
3. For example, Nevada’s Home at Last bond program today offers either a 4.875% 30-year fixed rate mortgage or a 3% down payment grant, and allows home purchases up to limits ranging from $258,690 to $409,587, depending on the county. Qualifying income for a household of three or more ranges from $76,820 to $103,320, depending on the county. Your state’s program will differ, depending on its housing prices and income levels.
4. When shopping for a home loan, ask lenders if they fund MRB mortgages. A loan officer who works with these special loans can fill you in about the particulars of your state’s programs. Continue reading ‘Mortgage Revenue Bond Programs for First Timers: Subsidized Interest Rates!’
(1 votes, average: 5 out of 5) Loading ...If your credit is, well, iffy, you’ll want to take note of this. FHA is taking a hard look at lenders with higher default rates, and taking away their approval to underwrite FHA mortgages. Even if every loan they approve and fund conforms 100% to FHA’s underwriting guidelines. Why should you care? A couple of reasons. Continue reading ‘FHA Cracking Down on Lenders: Here’s Why You Should Care’
(No Ratings Yet) Loading ...For those with no down payment, a low or moderate income, and borderline bad credit, USDA rural mortgages can be the fairy godmother. But, unlike FHA or VA, which just guarantee mortgages underwritten by private mortgage lenders, USDA, through its direct lending program, actually funds those loans. That means the agency can run out of money. Continue reading ‘USDA Is Running Out of Money for Rural Loans’
(1 votes, average: 4 out of 5) Loading ...You’d like to buy a house. You cleaned up your bad credit, for the most part, you have a good job, and you could make a monthly house payment. But how are you supposed to save up a down payment when you’re paying rent? Good question. Continue reading ‘Down Payment Assistance, Closing Cost Help Available’
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Gina Pogol writes for an online media company about mortgage and finance. In addition to a decade in mortgage lending, she formerly consulted for Experian and other credit bureaus, and worked as a tax accountant for Deloitte. She has a BS in Financial Management from the University of Nevada.
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