Posts Tagged: ‘credit score’

New Law To Help Los Angeles and Orange County Real Estate?

November 19, 2011 Posted by Andre Hemmersbach

On Friday morning November 18th, President Barack Obama signed a bill that among other things will specifically aid real estate sales in high cost areas of Los Angeles and Orange Counties. In fact this is quite a surprising move by the administration and congress seeing all the rhetoric coming from Washington about the federal government getting out of the mortgage business.

The last two years  have seen the mortgage industry get very conservative as a whole. There have been a barrage of “take-a-ways” from Fannie Mae (FNMA), Freddie Mac (FHLMC) and the Federal Housing Administration (FHA), the institutions that are guaranteed by the US Government and purchase the majority of all mortgages today. These changes have made getting a home mortgage more difficult. One such recent change that just took effect on October 1, 2011 was the decrease in the temporary loan limits from $729,750 to $625,500. The law that went into effect today, returned the maximum loan limit for FHA to $729,750 for single family residences and condos until the end of 2013. No changes were made to the maximum loan limits of FNMA or FHLMC.

After the drop in the maximum loan limits sales of properties in Orange and Los Angeles counties with loans between $625,500 from $729,750 fell sharply, to 102 last month, according to San Diego real estate firm DataQuick. That was a 71% decline from 350 in September and down 71.5% from 358 sales in October 2010

How successful this move will be in stabilizing the real estate market will have to be seen. FHA is predominately used by first time homebuyers because it is less restrictive in income qualification and credit requirements, only requires a minimal 3.5% down payment (all of which can be a gift) and allows for non occupant borrowers such as parents trying to help their children qualify for a home. One of the few draw backs of FHA financing is that all FHA loans regardless of down payment require mortgage insurance. Besides how many first time homebuyers purchase a home in the $675,000 range?

 These institions are backed by guarantees made by the US government. As financial losses from the real estate implosion have mounted and regulations from the financial reform acts have become constrictive  other sources for mortgage money has become very scarce.

 . . Currently the Federal Government guarantees loans purchased by FNMA, FHLMC and FHA and over the last 3 years other sources for mortgage money has become very scares.

This is something that will help buyers using using FHA ) financing. F

New Credit Requirements

February 16, 2011 Posted by Andre Hemmersbach

A recent change by Fannie Mae, the agency who purchases 90 of conventional fixed rates, has just made it even more important for you to work with an experienced loan officer very early in the “shopping for a home” phase. These recent changes make it more expensive to get a home loan unless you have a perfect credit score. Formerly a FICO score, a measure of your credit worthiness invented by the Fair Isaac Corporation, of more than 720 would get you the best rates. As of February 3, 2011 a FICO score of 735 on a sales price of $350,000 with a 10% down payment would cost you $1600.00 more in closing costs or $74.00 more per month in a higher mortgage payment. The increases get even more drastic if your credit score is lower. For instance a 670 FICO would cost you $5513 more in closing costs and $148 more in monthly payments. These increases are substantial for most home buyers!
To help resolve the issue of over paying for your home loan, get with an experienced loan officer 90 to 120 days before shopping for a home. During this time corrections can be made to erroneous credit blemishes and reporting. Sometimes it can be as little as moving 20% of a credit card balance to an empty credit card that can raise your score enough to put you over a pricing benchmark.
Most recently we helped a customer who we saved over $2600 in extra closing costs by opening a credit card and having him charge a $12.00 purchase and pay it off. His credit score jumped 5 points moving him from 739 to 744, or 4 points above the 740 cut off for additional pricing.
If I can be of assistance to you in your lending needs please call me.