Posts

Buyers in Texas Don’t Need a ‘Perfect’ Credit Score

Buyers in Texas don’t need a perfect credit score to qualify for a loan. Having a high credit score can help buyers secure a loan with a lower interest rate. However, today’s loans have more forgiving guidelines when it comes to a buyer’s credit score, which is especially true with government-funded loans. Where Do Credit […]Read More

The Dispute over Disputing Disputes (on Credit Reports)

One of our most frequent credit issues involves reported “disputes.” Borrowers report an account in “dispute” whenever they believe some credit data (usually late payments) is reported in error. We usually need to remove the “disputes” from the credit report altogether with an expensive “rapid rescore” and borrowers often do not like this. We have […]Read More

Minimum Credit Score for FHA: 580; Minimum Score Conventional: 620

Our FHA investors and lenders allow credit scores as low as 580 for low balance loans (under $417,000). Scores under 620 require a “manual underwrite.” Manual underwrites require perfect credit over the last 12 months and much lower than typical debt ratios. High Balance FHA ($417,000 to $625,500) requires a minimum credit score of 620. […]Read More

“Rapid Re-Score” OK, But Not If Borrower In Contract

We often have borrowers with errors on their credit reports and/or large debts they just paid off. Corrections to their credit reports can improve scores significantly. We have software, in fact, that can estimate the potential score-improvements relatively accurately. If borrowers mail proof of the correct info to the credit bureaus, or if they let […]Read More

“Average Credit Score = 750!”; Bad Thing?; Good Thing!

Over the last six months, the average credit score of an approved borrower was a whopping 750. The average score of a borrower denied mortgage credit was 704! These are amazingly high scores in light of the fact the average score of borrowers in the 25-34 year old (First Time Buyer) range is only 649. […]Read More

Can’t Ignore Spouse’s Bad Credit If “Benefited” From Debt/Home

It is well-known that FHA underwriters look at both spouses’ credit even if only one spouse is buying a property. Hence, a spouse’s recent foreclosure or short sale can prevent another spouse (who might have perfect credit) from getting FHA financing. This happens often in fact. In these situations, we often turn to conventional financing […]Read More

LTVs for Investment Property Purchases & Refi’s

We get asked over and over about minimum down payments for investment properties. Many buyers have the misconception that they have to put 25% down; that is not the case. For investment property purchases with loans under $417,000, borrowers can put down as little as 15%, but the rate and the PMI are so high, […]Read More

Job Changes OK in Most Cases; Rules for New Jobs

Job Change OK: We have a pre-approved borrower with very tight debt ratios looking for a property. She asked us if it would be OK to accept a new job in the same field, but with $15,000 more in salary. She thought a new job would jeopardize her pre-approval, when it actually just makes her […]Read More

Adjusting Self Employment Income to Qualify – Must Average TWO years

Every year during “tax season”, we have self-employed and landlord borrowers coming to us and asking “how much income do I need to qualify…”. They then try to adjust their income tax returns accordingly. These borrowers will show fewer deductions on their tax returns in order to increase their income enough to qualify for their […]Read More

“Stated Income” Program Is Asset-Based

We still get constant inquiries about “Stated Income” programs. There are no true “stated” programs. The only options are “hard money” loans, requiring 30% down and a rate of about 10%, or our Asset Based loans. We have a program that imputes income by amortizing liquid assets over 30 years. A $1,000,000 stock portfolio, for […]Read More

Impressed Realtor Loved How We EDUCATE All Buyers

Earlier this week, a 73 year old Silicon Valley Realtor called our office because he represented one of our many pre-approved buyers. He was sharp, well-educated and articulate, and he has been in the business much longer than most of our employees have been alive. After he told us how things are, and how things […]Read More

Order “Fresh Credit” On Day of Short Sale

And because these borrowers will never miss a payment up to the short sale date, they can still buy a new home the next day with FHA financing (as most know). But because short sales (once reported to credit bureaus) can lower credit scores as much as 100 points, it is essential to run a […]Read More

Using Rental Income to Qualify for More Properties

We have a client who works for the post office with an income of just over $50,000 per year. Despite his limited income, he was able to purchase multiple properties with mortgages. He is able to take advantage of real estate investment opportunities b/c he can use the rent on the properties he buys to […]Read More

Homebuyer’s Assistance Programs Not That Great

We have buyers frequently looking to access “Homebuyer’s Assistance” or “Down Payment Assistance” programs offered by various cities and other non-profit entities. These are programs where a portion of an FHA down payment (usually 3%) is either gifted or loaned to the buyer at a very low rate. We often discourage these programs because the […]Read More

“Consumer Credit” Scores Not the Same as “Mortgage Credit” Scores

Borrowers frequently pull credit reports from various internet or consumer sources and then tell us that their credit scores are much higher than the scores we pulled. This is because there are many different models used for credit scoring, depending on the industry or entity requiring the scores. The credit scoring models or criteria employed […]Read More

What If Spouse Has Horrible Credit? Too Much Debt?

We frequently get husband/wife borrowers where one spouse has stellar credit and the other has awful credit. Most people know that the solution is simply to do the loan in the name of the “good-credit-spouse” only, as long as the good-credit-spouse has sufficient income to qualify on his or her own. The bad-credit-spouse can do […]Read More

Credit Scores Affect Your Rate More Than Ever; What To Do? “What If”

Credit Scores affect rates, points and qualifications more than ever before. Below is a small sample of how much different credit scores affect the “points” at one of our better lenders for an 80% Loan-to-Value Loan: 720-740: Additional 0.25 Points 700-719: Additional 0.75 Points 680-699: Additional 1.5 Points 660-279: Additional 2.5 Points We address this […]Read More

“Rapid Re-Score” to Raise Credit Score; How it Works?

Credit Scores are now more important than ever. We have some lenders that will not even accept High Balance Conforming Loans (loan amounts above $417,000) if the middle credit score is below 700. Each of the major credit bureaus (Equifax, Transunion and Experian) has its own scoring models, but all are very similar. Almost all […]Read More

Credit Repair and New Credit Score Guidelines

Almost all of our FHA Lenders now require a 640 Credit Score. And Conventional Lenders and MI Companies are also stricter with respect to credit scores nowadays. If someone’s score is 10 to 20 points below requirement, we can use our software to do a “re-score analysis” and then actually do what is called a […]Read More

Different Lenders – Different Guidelines; Broker Arena Stronger than EVER, and VERY NECESSARY

We had a delayed approval for a very tough transaction (seasonal employment; flip property) this week, and the Realtor called me in a panic. She was told by a bank that Brokers are getting their “Broker Approvals” pulled by lenders all the time, and she thought that was the cause of our delay. We were […]Read More

Hard Money; Inflation Looms

Advantages of Hard Money: (1) Condition of the Property is usually not an issue; (2) Credit is largely irrelevant; (3) Income does not need to be verified; and (4) Very short escrow periods are not an issue. Inflation is here, and rates appear to be heading up, although some analysts think the Fed will affect […]Read More

Pay off Consumer Debt and Put Less Money Down With FHA Loan

We had a First Time Buyer call last week looking to buy a $600,000 property. He had saved approximately $60,000 for a down payment, BUT he also had a car loan and consumer debt totaling about $30,000. The payments for the car loan and the credit cards totaled over $600. In addition, the presence of […]Read More

GDP Down; What Affects Rates

Rates are lower than ever right now, and we think it is unlikely that they will get any lower because banks simply cannot handle any more volume. GDP numbers were released showing the US’ largest decline in output since 1982 – over 6% in the fourth quarter of 2008. The only good news is that […]Read More