Category Archives: Interest Rates

Credit scoring changes may help you get a loan

Have major medical debts kept you from securing a mortgage? Have you found the terms of loans you’re able to qualify for too expensive? All of that might change soon due to an upgrade to the FICO credit scoring system. The new score is called FICO 9, and it aims to provide assistance to millions of Americans who have found themselves hit by major medical debt and cross-agency reporting problems. Here are the highlights about the FICO 9 score:

A more refined look at debt collection
With FICO 9, your credit score will be calculated considering medical versus non-medical collection agencies. Debts in collection due to medical bills will be treated differently than non-medical debt in collection. According to FICO, because of this change “the median FICO Score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points.”

Better scoring consistency
Errors in debt reporting and credit scoring across agencies have shut some buyers out of securing a mortgage. With FICO 9, the company is promising the highest degree of consistency in scoring.

How FICO 9 may impact your mortgage rate
Keith Gumbinger, vice president of HSH.com had this to say in a recent Market Trends newsletter: “A borrower today with a FICO score in the 660 to 679 range and a 10 percent down payment would have to pay a fee of 2.25 percent to get access to today’s best mortgage rates (about 4.125 percent for a conforming 30-year fixed-rate mortgage give or take a little). Since that fee might be hard to pay out of pocket, many borrowers decide to incorporate that fee into the interest rate, which would then climb to perhaps 4.625 percent without the fee. But if the borrower had a credit score of 680 to 699, and that same borrower would see a fee of only 1.25 percent and a corresponding fee-included rate of 4.375 percent or so.”

Not all lenders will use FICO 9
One thing to be aware of when applying for a loan is the possibility that certain institutions may not be using FICO 9 yet. For those lenders who use earlier versions of the FICO score or other types of credit scores, you may not benefit from the changes to FICO’s scoring system.

Overall, this is good news for a lot of potential buyers. Hopefully the changes in scoring will open up the dream of homeownership to millions.

Thinking about getting pre-qualified for a mortgage? Get in touch with me today.

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Nice Article; Good ReBlog

Underwater with Two Mortgages? Here are 5 Ways to Refinance

By: Dona DeZube

Published: May 8, 2012

Having a second mortgage or home equity line can make refinancing an underwater mortgage nearly impossible, but one of these five strategies might bail out your refinance.

To understand why being underwater on your two mortgages is a problem, you need to know how first and second mortgages work:

  • When you get your first mortgage, that lender is first in line to get paid off if you don’t pay your mortgage and your home is sold via foreclosure.
  • When you then get a home equity line or second mortgage, it’s called a second mortgage because that lender is second in line to get paid.
  • When you refinance your first mortgage, you actually pay off the original first mortgage. Unless you pay off the second mortgage, too, your second mortgage legally and automatically moves into place as your first mortgage.
  • No lender will give you a low, first mortgage interest rate unless it can be first in line for the foreclosure sale proceeds if you don’t make your payments. If your second mortgage has moved into first position, any new loan would automatically be behind it in line.

Here are five options that can help you refinance your first mortgage anyway:

1. Ask your second lender to subrogate its lien on your home. In simple terms, subrogate means your second mortgage lender agrees to stay in the second position and let your newly refinanced mortgage be the first to get paid off if your home goes into foreclosure.

This is much more likely to happen if the same company holds your first and second mortgages than if two different companies or investors are involved, says Sam Garcia, publisher of MortgageDaily.com.

If you have your first mortgage with one lender and your second with another, ask your second mortgage lender if it will refinance your first.

2. Use HAMP to modify your first and second mortgages at the same time. If you can prove it’s financially challenging for you to pay your first and second mortgages, you might qualify for the federal government’s Home Affordable Modification Program (HAMP). Banks that offer the HAMP second lien modification program will sometimes reduce or forgive what you own on your second mortgage.

3. Try HARP if you always pay on time. If you’ve been making payments on time and your first mortgage is for 80% or more of your home’s value, try the Home Affordable Refinance Program (HARP), which helps financially healthy home owners who are underwater because of combined first and second mortgages.

HARP is only for Fannie Mae- and Freddie Mac-guaranteed loans.

4. Check with your state attorney general for funds. The 2012 multi-billion-dollar settlement between the biggest banks and 49 state attorneys general (over robo-signing) to aid distressed borrowers included money to pay off second mortgages in some states. 

“It’s worth finding out if that’s the case in your state by checking the website for your state’s AG to see if your existing servicer is participating,” Garcia says. And to find out if you’re eligible.

Search the AG’s website for “mortgage settlement” to find the information.

5. Do an FHA short refi. FHA has a short refi program for home owners whose combined first and second loans exceed their home value by no more than 15%. So, for a $100,000 home, you could owe $115,000 on your first plus your second mortgage and qualify. Contact your lender to see if it offers FHA’s short refinance option. The details:

  • The program is only for home owners who don’t currently have an FHA-guaranteed loan.
  • Your first mortgage lender has to agree to reduce your mortgage by 10%.
  • You have to meet FHA’s borrower guidelines for income and credit.

If there’s anything I can help you with, please don’t hesitate to contact me! Email: crobertson@realestatelinks.com or check me out on Facebook: Facebook.com/soldonChristie

Renters: Explore Your Purchasing Power

I think you’d probably agree that the worst investing advice in the world is: Buy high, sell low. That’s the very definition of losing money on an investment, right?

So let me ask you: Why would you wait for the housing market to improve before buying a house?

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I understand there’s a lot of uncertainty out there. Job security is questionable, unemployment is still high in some areas and you’re not sure what it takes to get pre-approved for a home loan. It can be scary. But here’s the thing:

Letting fear dictate your financial strategy for the future is a guaranteed way to pay too much for a house in the years to come.

Here are some facts:

– Interest rates are at or close to historic lows

– Prices for homes have plunged to the lowest levels we’ve seen in a generation

– Bank and government-owned property inventory is at an all-time high

– Rents are rising and rental inventory is shrinking (limited rental options!)

Shouldn’t you, rather than your landlord, be the one who benefits from owning a home? Right now is the “buy low” in the “buy low / sell high” cycle. Every day I help renters explore their purchasing power. You might be surprised just how qualified you are for home ownership.